Adani Enterprises Gets a 400 Million Boost
Adani Enterprises, which recently opened Rs.20,000 crore FPO (from January 27 to January 31, 2023) will receive an investment of $400 mn from Abu Dhabi’s International Holding Company. IHC has a subsidiary – Green Transmission Investment Holding RSC Limited. IHC’s investment in the FPO of Adani Enterprises will go through via this subsidiary.
Driven By Confidence
Syed Basar Shueb, CEO of IHC said that the decision to invest is driven by the company’s confidence in the fundamentals of Adani Enterprises. The company is aiming for long-term growth by leveraging the growth trajectory of Adani Enterprises.
This is not the first time that IHC has invested in a company belonging to the Adani Group. The company had earlier invested $2 billion in various companies under the umbrella of the Adani Group.
What Is FPO?
Follow-on Public Offering is – as the name suggests is a follow-on to the Initial Public Offering offered by any company. The primary reason behind any company’s coming up with FPO is to infuse further investment into the company. An FPO can be in the form of a diluted FPO or a non-diluted FPO. In the case of a diluted FPO, the company releases fresh shares which results in the reduction of Earnings Per Share and the share price of the company. In the case of a non-diluted FPO, the largest shareholders in the company sell some of their shares. The proceeds of the sale go to the person(s) who sold the shares. This method does not decrease the price of the share.
Despite the poor response by the public to the FPO thanks to the damning report published by Hindenburg Research, IHC has reiterated that it has confidence in the way the Adani Group of companies is performing. This confidence, probably, stems from the fact that most of the assets of Adani Group are in the form of infrastructure. Its ports, power infrastructure, green-electricity infrastructure, airport terminals, mines etc can be secured in case things don’t go well in Adani Group. In short, the infrastructure of the Adani group of companies is not vaporware.
The stock price of Adani Enterprises increased from the low of Rs.2892.85 to the high of Rs.3035.55. As of writing this article, the price was hovering around Rs.2976. This amounts to about a 5% increase from the previous day.
The International Holding Company – as the name suggests – is a premier Dubai-based company that invests in high-growth companies across the world. IHC boasts of investing in 400 entities. Some of the companies that IHC has some or the entire stake include – Al Seer Marine, Alpha Dhabi Holding, Easy Lease etc.
About Adani Enterprises
Adani Enterprises is the primary company of the Adani Group from which the venture started its journey. The company is spread across several verticals that include mining, edible oil, airport, port, defence and aerospace etc. Gradually a lot of these arms – like Adani Gas and Adani Green Energy – were demerged from Adani Enterprises.