Adani Enterprises has filed papers with market regulator Securities and Exchange Board of India (Sebi) for raising Rs 20,000 crore from follow-on public offer (FPO), which is being touted as the country's biggest FPO.
Just like an initial public offering (IPO), where a new company raises money from investors, in an FPO an already listed entity raises money from investors by selling its stake to public shareholders.
Adani Enterprise had in November last year showed its intention for raising funds via FPO. In a stock exchange filing dated November 25, Adani Enterprises said that its board approved raising of funds by way of a further public offering through a fresh issue of Equity Shares by the Company aggregating up to Rs 20,000 crore.
In that process, reports suggest that Adani Enterprise could come out with the FPO as soon as last of week of this month. As per the reports, IDBI Capital, Jefferies, ICICI Securities, SBI Capital, Bank of Baroda Capital and Elara Capial have been appointed as bankers for the FPO.
The company plans to raise funds by selling shares of face value of Re 1 however the price band is yet to be disclosed by the company. Market experts say that Adani Group would sell shares to its retail investors and employees at a discounted price.
The company plans to dilute 3.5 per cent stake through the FPO. Currently, the promoter group holds 72.63 per cent stake in the company. Gulf sovereign funds like ADIA and Qatar Investment Authority have shown interest in investing in Adani Group companies, according to an Economic Times report.
FPO is generally considered an advantage compared to IPOs because investors get an idea about the company's management, business practices, and potential growth. The company listed on the stock exchange is not new, and investors will get the historical reference for its earnings report, the performance of the stock market, and much data to bank on, brokerage firm Nirmal Bang said.
The price for FPO is usually lower than the market price to attract shareholders to invest more. Several shareholders engage in the FPO to buy shares at a discounted market price and sell them in the market to gain a premium on their transaction, said Nirmal Bang.
It will be a good opportunity for retail investors to buy stocks in the FPO at a discounted valuation since the stock has done remarkably well in past and the company has been foraying into new businesses and expanding its business at a rapid pace, analysts said.
In quarter ended September 2022, Adani Enterprises net profit more than doubled to Rs 460.94 crore compared with Rs 212 crore during the same period last year.
Its revenue from operations jumped 189 per cent to Rs 38,175.23 crore from Rs 13,218 crore in the year ago period.