Adani Green Energy has received approval from its board to raise Rs 12,300 crore through a qualified institutional placement (QIP) route on July 6. The news of this successful fundraising endeavor has boosted investor confidence, leading to a surge of over 2 percent in Adani Green Energy’s shares during intraday trade.
By the end of the trading day, Adani Green Energy’s shares settled 1.5 percent higher at Rs 962.20 on the National Stock Exchange, reflecting the positive sentiment surrounding the company’s financial plans.
For those who are unaware, QIP stands for Qualified Institutional Placement. It is a method used by publicly listed companies in India to raise funds from qualified institutional buyers such as mutual funds, insurance companies, banks, and foreign institutional investors. Through QIP, companies can issue shares or other securities to these institutional investors on a private placement basis, bypassing the need for a public offering.
This fundraising initiative is expected to alleviate concerns regarding the debt servicing capabilities of the Adani Group, fostering greater trust among investors. Adani Green Energy aims to attract additional institutional investors and increase research analyst coverage for its operations, enhancing transparency and market visibility. According to a report by Bloomberg, these efforts are geared towards rebuilding the company’s reputation and regaining market value following the crisis sparked by the detrimental report issued by US-based short seller Hindenburg Research earlier this year.
The Hindenburg report had made serious allegations against the Adani Group, including stock manipulation through shell companies, corporate misgovernance, and highly leveraged books, dubbing it as the largest con in corporate history. Despite vehemently denying these allegations, the report had a significant impact on the group’s market capitalization, wiping out billions of dollars at one point.
Adani Green Energy’s successful fundraising plans follow similar moves by two other Adani Group companies, Adani Enterprises and Adani Transmission, which recently announced their intentions to raise a combined total of Rs 21,000 crore. Adani Enterprises aims to raise Rs 12,500 crore, while Adani Transmission plans to raise Rs 8,500 crore. These strategic efforts demonstrate the group’s determination to recover from the crisis and regain its financial stability.
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