Two Adani Group units cleared to raise up to $2.57bn on stock market

Adani Enterprises and Adani Transmission plan to sell equity shares

Adani Group's headquarters in Ahmedabad, India. The company's earnings recent earnings report may strengthen its growth and fundraising plans. Reuters

Two Adani group companies, including the Indian conglomerate's flagship, announced plans on Saturday to raise up to $2.57 billion from the market, months after a short-seller report battered investor confidence and drove share prices down.

India's Adani Transmission said its board approved a plan to raise up to 85 billion rupees ($1 billion) from the stock market. Adani Enterprise said in a filing to exchanges that its board had approved plans to raise up to 125 billion Indian rupees in a similar manner.

US-based short-seller Hindenburg Group's January report damaged investor confidence and drove share prices of the group down.

Adani has denied all allegations, although India's market regulator is investigating Hindenburg's allegations as well as Adani group's related party dealings following a Supreme Court directive.

Adani Transmission and Adani Enterprise, billionaire Gautam Adani's flagship, said in separate statements they planned to raise the funds by selling equity shares through qualified institutional placements or other permissible methods.

Adani Green Energy, which was also expected to announce similar funding plans, on Friday rescheduled its board meeting to May 24.

A planned $2.5 billion share sale by Adani Enterprise fell through after the scathing short-seller report.

Adani Enterprises is recovering from the hit it took.

Last week, it reported that latest quarterly profit more than doubled, helping the company firm refocus attention on the conglomerate’s growth potential after the short seller attack this year wiped out more than $100 billion of market value.

The Ahmedabad-based company's net income increased 138 per cent in the first quarter to 7.22 billion rupees from 3.04 billion rupees in the same period last year, it said.

Revenue rose 26 per cent to 313.5 billion rupees, helped in part by the mining and airport business, while total costs were up 22 per cent to 301.8 billion rupees, the filing said.

The earnings may bolster Adani Enterprises’ growth and fund-raising plans as it seeks to cultivate businesses from airports and data centres to roads and digital services.

The incubator of the ports-to-power conglomerate has changed some of its expansion plans and focused on convincing investors of the strength of its operations after the report at the end of January.

“These exceptional results also highlight our consistent track record of gestating and building critical infrastructure businesses,” Adani said in a post-earnings statement.

“Our focus remains on governance, compliance, performance and cash flow generation.”