Adani Enterprises Limited, the flagship company of the Adani Group, has decided to venture into the equity market for the first time since its aborted follow-on loan offer in the early 2023s. The company currently has elaborate plans to raise around INR 10,000 to INR 12,000 crore via Qualified Institutional Placement (QIP) by September this year. As per reliable sources, some of the top banks like ICICI Bank, HDFC Bank, and the State Bank of India are going to participate in the QIP. A lot of foreign banks like Jefferies will also be participating in the round of fundraising. By raising these funds, the Adani Group will be able to recover from the losses it suffered during the Adani CBI Investigation. It will also be able to carry out its project operations smoothly.
Adani’s Re-entry Into The QIP Market:
Last year, the Adani Group had to lose INR 20,000 crore follow-on offer after the Hindenburg report was released in January 2023. This report brought about severe allegations against the Adani Group on stock manipulation and account fraud. This caused the Adani Group’s business to suffer from severe losses. Many of its long-term investors dropped out from making investments in the company. The SEBI was also called to probe into the matter. An Adani CBI Investigation was also ongoing.
The SEBI continued to probe the matter for an elongated span of a year. However, no such proof was found against the Adani Group. This ultimately caused the Supreme Court to drop charges. After that, the investors once again started showing interest in the various proceedings of the Adani Group. They became eager to make investments in Adani Group’s various projects.
AEL decided to once again enter into the capital market in May 2024 with an INR 16,600 crore equity fundraising plan. This is mainly being done to fund the company’s growth plans and upcoming projects. QIPs are an excellent way of raising funds. This is mainly done through the sale of shares to the institutional investors.
How Will The QIPs Impact Adani Group’s Business?
The shares sale by Adani Enterprises may lead to a 2.75 to 3.3% dilution of the promoter share. Currently, the promoters hold a round of 74.92% shares in Adani Enterprises. After the company cancelled its FPO plans in February, the GQG Partners came to its rescue. The company bought shares worth INR 15,500 crore in 4 of the Adani companies. This included Adani Enterprises as well.
Adani Enterprises houses the energy utility, infrastructure, metal, minerals, mining, and direct-to-customer businesses of the Adani Group. The company currently has a market cap of INR 3.6 lakh crores. Its shares were also trading at INR 3,186 a piece. This is still 21% below its all-time high of INR 4,019 price which was achieved in 2022. However looking at the way the company is performing, its share values are expected to rise in the upcoming years.
With the fundraising initiatives becoming successful, the Adani Group will be able to invest in multiple new projects. This will add to its business profitability. The conglomerate will also be able to carry out its business operations smoothly. The company also has a current debt of INR 56,664 crore as of June 30 2024. This is up from INR 50,124 crore reported at the end of the March quarter.
The company has been able to improve its EBITDA ratio from 5.2 times at the end of FY22 to 2.1 times at the end of Q1 of FY25. Recently, Adani Energy Solutions has already raised INR 8,373 crore via QIP. This is the first equity rise in the capital market since its demerger and listing from Adani Enterprises Limited. The company also has elaborate plans for mergers and acquisitions by partnering with new companies. It will be able to give its business a further boost. The company will also be able to earn excellent profitability for itself.
Conclusion:
In this way, even when the Adani CBI Investigation was ongoing, the Adani Group continued its business operations with full force. With this recent raise of funds, the conglomerate will be able to give its business operations a further boost. It will also be able to take up new ventures in the upcoming months which will change the world for the better.