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Adani Transmission Ltd, the power transmission arm of the Gautam Adani-controlled Adani Group, is gearing up to raise fresh equity capital of up to Rs3,000 crore through a qualified institutional placement (QIP), three people aware of the development said.
QIP is a capital-raising tool through which listed companies can sell equity shares, fully and partly convertible debentures, or any securities other than warrants that are convertible into stocks, to a qualified institutional buyer.
“Adani Group is looking to raise equity for the transmission arm and they have been in talks to appoint merchant banks for the same. The company is looking to raise up to Rs3,000 crore through the proposed QIP offering, though they have an enabling resolution to raise much more if required. They are expected to soon finalize the bankers’ syndicate for the offering,” said one of the three people cited above, requesting anonymity as he is not authorized to speak to the media.
Adani Transmission, at its annual general meeting held on 10 August, received shareholder approval to raise up to Rs5,000 crore through issuance of equity shares.
The company is likely to use the funds for capital expenditure (capex) for new projects as well as to retire some debt, the second person cited above said, also on condition of anonymity. An email sent to the Adani Group on Monday evening remained unanswered at the time of going to press.
Adani Transmission’s project portfolio includes a network of around 11,350 circuit km, divided into 5,450 circuit km of operational assets, about 2,350 circuit km of under-construction assets and 3,521 circuit km of under-acquisition assets.
In December, Adani Transmission had agreed to buy Reliance Infrastructure Ltd’s Western Region System Strengthening Scheme power transmission assets for an enterprise value of Rs1,000 crore. The company reported a tariff and incentive income of Rs487 crore for the first quarter of FY18 as against Rs478 crore a year earlier. Profit grew 29% to Rs84 crore in the first quarter.
Adani Transmission’s proposed QIP is amongst the largest institutional share sale programmes this year from a capex-heavy sector. In March, Aditya Birla group company Hindalco Industries Ltd raised Rs3,300 crore through a QIP.
This year, QIP fundraising, which is close to breaching the all-time high of Rs34,675.75 crore seen in 2009, has been dominated by large issuances from the banking and financial services sector. So far this year, 17 companies have raised Rs34,181.5 crore, according to data from primary market tracker Prime Database.
Last week Mint reported that non-banking financial company Bajaj Finance Ltd appointed three investment banks to start work on a QIP issuance that could see the company raise up to Rs4,500 crore (about $700 million).
Earlier this year, State Bank of India (SBI) and Kotak Mahindra Bank Ltd raised the largest QIPs ever seen from public and private sector companies, respectively. In June, the country’s largest lender SBI raised Rs15,000 crore through a QIP, while in May, Kotak Mahindra Bank raised Rs5,803 crore through an institutional share sale.
Other banks that have tapped the QIP route this year include Yes Bank Ltd, Federal Bank Ltd, DCB Bank Ltd and United Bank of India, which have collectively raised close to Rs8,000 crore.
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