Why Adani Enterprises ended Rs 800cr NCD issue ahead of schedule

Adani Enterprises Limited, the flagship company of the Adani Group, has announced the early closure of its public issuance of ₹800 crore in secured non-convertible debentures (NCDs). Initially scheduled to close on September 17, 2024, the issue will now close on September 6, 2024. This decision was approved by the company’s Management Committee of the Board of Directors on September 5, 2024, as per an exchange filing by the company.

The NCD issue, which opened on September 4, comprises 80 lakh secured, rated, listed, redeemable NCDs with a face value of ₹1,000 each, amounting to ₹400 crore. Adani Enterprises has a greenshoe option to retain oversubscription up to an additional ₹400 crore, bringing the total issue size to ₹800 crore. The NCDs are available in tenors of 24 months, 36 months, and 60 months, offering options for quarterly, cumulative, and annual interest payments across eight series. The decision for early closure was made in compliance with the Securities and Exchange Board of India (SEBI) regulations governing the issue and listing of non-convertible securities.

Reasons Behind the Early Closure

Adani Enterprises’ decision to close the NCD issue ahead of schedule is reportedly part of a broader strategy to diversify its funding sources and reduce dependency on a limited pool of lenders. By tapping into the retail investor market through such public issues, the company aims to spread its financial risk and attract a more diverse investor base. The Adani Group is planning to raise nearly ₹40,000 crore from retail investors over the next three to four years by launching similar public issues for other group entities. This strategy aims to lower the group’s concentration of rupee loans from both public and private sector banks, according to industry sources.

The announcement also comes at a time when the Adani Group has been increasingly focusing on expanding its financial market offerings and engaging more retail investors. The group sees significant potential in leveraging these markets to secure capital for future growth while maintaining financial stability and reducing reliance on traditional bank loans.

Market Impact and Investor Response

Following the announcement of the early closure, shares of Adani Enterprises saw a minor increase of 0.08%, closing at ₹3,014.85 on the Bombay Stock Exchange (BSE). Market analysts suggest that this move could be seen as a positive step towards proactive financial management and risk diversification for the Adani Group. However, the early closure may also reflect the group’s urgency in raising capital quickly to meet its expanding project needs and to manage its debt more effectively.

The NCDs offered by Adani Enterprises have garnered significant interest from investors due to their attractive yields and flexible payment options. The minimum investment required is ₹10,000, making it accessible to a wide range of retail investors. Given the current economic environment and market volatility, such high-yield investments in stable conglomerates like the Adani Group are considered an appealing option for many investors.

Adani’s Future Plans for Fundraising

The Adani Group’s strategy to continue raising capital from retail investors is indicative of its long-term growth plans across various sectors, including energy, infrastructure, and logistics. The conglomerate’s intent to reduce reliance on a concentrated pool of lenders aligns with its broader goal of financial resilience and sustained expansion.

With the early closure of the NCD issue and its ongoing efforts to diversify funding sources, Adani Enterprises continues to demonstrate a strategic approach to managing its capital and investor relations. The market will closely watch the group’s future moves, especially regarding additional public issues and capital-raising efforts.