Adani Enterprises to raise Rs 20,000 crore in India’s biggest FPO for green, digital businesses

Adani Enterprises to raise Rs 20,000 crore in India’s biggest FPO for green, digital businesses

The Board of Adani Enterprises (AEL) on Friday approved the raising of Rs 20,000 crore in the country’s largest follow-on public offering (FPO) of new shares, beating Yes Bank’s Rs 15,000-crore issue in 2020.

The proposed fund raise comes as the group led by Gautam Adani aggressively expands into sectors such as cement and healthcare, amid some concerns about its elevated debt levels and large promoter shareholding.

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Over the last several quarters, the Adani group made public a series of aggressive growth plans across sectors to be executed through expansions and acquisitions. AEL has business interests in the energy and allied sectors such as power generation and transmission, ports and SEZs as well as in airport management, roads, data centre and water infrastructure.

The company’s stock, which has jumped 133% in the last 12 months, closed 0.48% down on the BSE at Rs 3,903.35. Promoters’ holding in the company stood at 72.63% at the end of September 2022. State-run Life Insurance Corporation of India is the single-largest public shareholder in AEL with a holding of 4.02%.

In September, the group announced plans to invest $70 billion in the clean energy sector, including green hydrogen. A further $23 billion is planned in green energy over the next 5-10 years. It also has plans to set up a 45 gigawatt renewable energy production capacity by 2030, entailing an investment of $20 billion.

While transport utility will see a $12-billion investment, the allocation for the road sector is $5 billion. Electricity transmission will get a $7-billion investment and $6.5 billion has been set aside for the data centre business. The group will invest up to $10-billion in the airport business.

In early September, debt research firm CreditSights published a note where it flagged elevated leverage for Adani Green Energy and the risk of future acquisitions hurting the credit profile of Adani Port and Special Economic Zone. The Fitch Group firm later said that it had “discovered calculation errors” in the debt report on the two Adani group companies following a conversation with the management.