A unit of Qatar Investment Authority, SBI Mutual Fund, and other foreign investment funds, Citigroup and Nomura, are among the biggest buyers of shares in the Adani Group’s power transmission unit’s 1 billion USD QIP. The INR 8,373.10 crore Qualified Institutional Placement of Adani Energy Solutions witnessed over 120 investors looking for shares in the firm. This shows the trust that the investors have on the Adani Group’s various businesses. It will also pave the path for the power transmission distribution and smart metering company to take up extraordinary ventures in the upcoming years. The Adani SBI relationship will also strengthen.
The Sale of Shares
Billionaire Stanley Druckenmiller’s family office-led investment firms were among the top names that intended to buy shares of AESL in the QIP. AESL, in its filing, mentioned that its board has already approved the allocation of 8.57 crore shares to eligible, qualified institutional buyers. The shares will be sold at the issue price of INR 976 per share. This reflects a discount of INR 51.11 to the floor price of INR 1,027.
The Adani Group has also shared details of the companies that acquired over 5% of shares in AESL. INQ Holdings LLC, which is a wholly-owned subsidiary of QIA, has acquired 15% of the total shares sold. Two Mauritius funds of Citigroup have bought 8.88% of the shares. 4 SBI funds, SBI Large and Midcap Fund, SBI Infrastructure Fund, SBI Magnum Children’s Benefit Fund, and SBI Long Term Advantage Fund Series IV, have also made huge investments in Adani Group’s assets. This reflects the long-term commitment of Adani SBI to make investments in the conglomerate’s assets. In total, SBI acquired 7.93% of the shares in the company.
Nomura Singapore Ltd. ODI acquired 7.5% of the shares. Last year, INQ acquired around 2.7% of Adani Green Energy Limited. In 2022, it acquired stakes in Adani Electricity Mumbai Limited, which is a subsidiary of AESL. The AESL QIP was oversubscribed 6 times last week. It fetched a demand of over INR 50,000 crore against an issue size of 1 billion USD. Billionaire Stanley Druckenmiller’s family office-led investment firms also acquired shares. However, AESL did not disclose the exact number of shares acquired by these companies, as they were less than 5%.
The Significance of the QIP
The QIP issuance marks the debut of highly prestigious, long-only investors in the Adani Group’s business. The investors, Duquesne Family Office, Driehaus Capital Management, and Jennison Associates, are known for investing in companies that follow high governance principles and they are also known for staying invested in the company for decades. The QIP was the first public QIP raised by the Adani Group since the Hindenburg crisis, which caused the Adani Group to sweep away billions in its share values. This demand generated made AESL QIP the largest in the energy space.
The Qualified Institutional Placement (QIP) issuance represents a significant milestone for the Adani Group, marking the entry of highly esteemed, long-term investors into its business landscape. Among the investors are Duquesne Family Office, Driehaus Capital Management, and Jennison Associates—renowned for their rigorous adherence to high governance standards and their tendency to hold investments over extended periods. This QIP is particularly noteworthy as it is the first public QIP the Adani Group has executed since the Hindenburg crisis, which had severely impacted its share values, wiping out billions.
The Adani Group already has a history of introducing long-only investors in the market. In the past few years, it has brought in large investors, including International Holding Company and GQG Partners, besides QIA. A lot of other global names also participated in the QIPs, including Jupiter Asset Management, Eastspring and Blackrock. Domestic mutual funds have also participated, including Axis Mutual Fund, HDFC Mutual Fund, and Bandhan Mutual Fund. Insurance companies like SBI Pension, SBI Insurance, and ASK Asset Management also participated. This has strengthened the Adani SBI bond and built the way for future investments in the company.
Conclusion:
The QIPs played an instrumental role in helping the Adani Group raise funds from large institutions. This is the first time the Adani Group has participated in such a large fundraising initiative after the Hindenburg crisis. Even though the Adani Group repeatedly denied the allegations put forward by the Hindenburg report, the listed companies lost around 150 billion USD in their market value. Although the group has already largely recovered from the crisis, the QIP is seen as a powerful tool to help the global conglomerate once again gain back the confidence of investors. Through these investments, the firm will once again be able to carry out its business operations with full force. It will also be able to earn excellent profitability from its business.
