Subscriptions to Indian billionaire Gautam Adani's $2.5 billion share sale surged on Tuesday to hit 70% even as many group stocks stayed under pressure following a scathing short-seller report that cast a shadow on the conglomerate's operations.
The secondary share sale of flagship Adani Enterprises (ADEL.NS) was subscribed 40% on Tuesday in the book building process, compared to only 3% in bids received by Monday.
With the 30% anchor investor book that closed last week, the issue is now subscribed 70%, Indian stock exchange data showed. The share sale needs at least 90% subscription to go through.
Adani group's stocks have tumbled after the Jan. 24 report from U.S.-based Hindenburg Research which flagged concerns about high debt levels and the use of tax havens, with cumulative losses now at $65 billion. Adani has called the report baseless.
An unsuccessful share sale would be a stunning setback for the group which has in recent days repeatedly said investors were standing by its side and the share offering would go through.
"It looks down to the wire with just a few hours remaining on the last day, but the offering should go through. Institutions seem to be subscribing to capitalise on opportunity to buy in bulk quantities outside the open market," said Dipan Mehta, founder director of Elixir Equities.
Over the weekend and through Monday, Adani's firm held extensive discussions with investment bankers and institutional investors to attract subscriptions, according to two sources with direct knowledge of the talks.
Demand from retail investors remained muted, garnering bids only worth around 8% of the shares on offer for that segment. On Tuesday, demand came from foreign institutional investors, as well as corporates who bid in excess of 1 million rupees each, data showed.
The company's shares were trading at 3,041 rupees, up 5% on Tuesday but still below the lower end of the share sale price band of 3,112 rupees.
"The follow-on public offering has to go through to restore investor confidence," said V. K. Vijayakumar, Chief Investment Strategist at Geojit Financial Services.
