Adani Enterprises’ ₹20,000 crore FPO opens on January 27, will fuel its green hydrogen ambitions, repay debt

Adani Enterprises’ ₹20,000 crore FPO opens on January 27, will fuel its green hydrogen ambitions, repay debt
Representative imageCanva
  • Gautam Adani-led Adani Enterprises’ ₹20,000 crore follow-on public offer (FPO) will go live on January 27.
  • The company intends to use part of the proceeds of the FPO to fuel its green hydrogen ambitions.
  • The price band of the Adani Enterprises FPO is set at ₹3,112-3,276 per share.
Gautam Adani-led Adani Enterprises’ ₹20,000 crore follow-on public offer (FPO) will go live on January 27 as it looks to fuel its green hydrogen ambitions, and repay a part of its debt. The price band of the FPO has been set at ₹3,112 — 3,276 per share, with each lot for retail subscribers consisting of four shares.

In its red herring prospectus (RHP), Adani Enterprises stated that the FPO will close on January 31. The anchor bidding will begin on January 25.

At ₹3,112 per share, the FPO is being offered at a discount of 9.4% as compared to the current market price of ₹3,434.

Adani Enterprises’ shares were down 4.5% as of 11:40 am on Thursday. At ₹20,000 crore, this is the largest FPO now in India, eclipsing the ₹15,000 crore FPO of Yes Bank which was launched in July 2020.

FPO, as the name suggests, is a follow up to the IPO. It is the issuance of new shares to the investors after a company is listed on the stock exchanges.


Fuel for the green hydrogen ambitions

Adani Enterprises intends to use proceeds to the tune of ₹10,869 crore towards capital expenditure in relation to projects in its green hydrogen ecosystem, improving its existing airport facilities and constructing a greenfield expressway.

It also said that it will use ₹4,165 crore towards partial repayment of debt of three of its subsidiaries — Adani Airport Holdings, Adani Road Transport, and Mundra Solar. It will use the rest for general corporate purposes.

According to the RHP, the company and its subsidiaries’ aggregate borrowings outstanding as on September 30, 2022, stood at ₹40,024 crore.

A glimpse into Adani’s $50 billion green hydrogen ambitions

Outlining the risks associated with its green hydrogen strategy, the company said that it has not been appraised yet by an independent institution.

“The implementation of our green hydrogen strategy has not been appraised by any bank, financial institution or independent agency, and is based on management estimates and internal management information systems and our business plan,” the company said in the RHP.

Adani Enterprises said that it will set up three giga factories – one each to manufacture solar modules, wind turbines and hydrogen electrolysers by 2030.

In its red herring prospectus, Adani Enterprises outlined that its end-to-end integrated green hydrogen ecosystem will see the company leverage its facilities at the Mundra special economic zone, allowing for seamless import and export of raw material and finished goods.

The company’s $50 billion green hydrogen ambitions will be undertaken by its subsidiary, Adani New Industries. In its initial phase, the company aims to develop a green hydrogen production capacity of 1 million tonnes per annum before 2030.

Earlier in July 2022, French petroleum giant Total Energies picked up a 25% stake in Adani New Industries, extending its partnership with the Adani Group from LNG terminals, gas utility and renewables business.

Adani Enterprises will also be competing with Reliance Industries in this sector – in its latest report, global brokerage Jefferies has valued Reliance’s electrolyser manufacturing business at $8 billion.

Adani Enterprises launched its initial public offering (IPO) in 1994 at an issue price of ₹150 per share.


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