Adani Enterprises FPO subscribed 1.1 times; HNIs, QIBs to the rescue

Subject : Economy

Section: Capital Market

Concept :

On the last day of Adani Enterprises’ follow-on public offer, the issue was home and dry with the total book getting subscribed 1.1 times, aided by qualified institutional buyers and high net-worth individuals.
Despite the damaging allegations made by short-seller hedge fund Hindenburg Research, which wiped out a considerable portion of promoter Gautam Adani’s wealth and the group’s market capitalisation, the company’s confidence that the FPO would go through was justified.
QIB subscription at 161 lakh shares was 1.26 times of the offer for that category.
Subscriptions from non-institutional investors were 3.3 times, while within that those bidding for amounts above ₹10 lakh put in bids that were nearly 5 times of the shares on offer.

Qualified Institutional Buyers

Qualified Institutional Buyer is a purchaser of securities that is financially sophisticated and is legally recognized by security market regulators to need less protection from sellers than most members of the public.
Qualified Institutional Buyers are those institutional investors who are generally perceived to possess expertise and the financial muscle to evaluate and invest in the capital markets.
Qualified Institutional Buyer shall mean:
- Public financial institution as defined in section 4A of the Companies Act, 1956;
- Scheduled commercial banks;
- Mutual funds;
- Foreign institutional investor registered with SEBI;
- Multilateral and bilateral development financial institutions;
- Venture capital funds registered with SEBI.
- Foreign Venture capital investors registered with SEBI.
- State Industrial Development Corporations.
- Insurance Companies registered with the Insurance Regulatory and Development Authority (IRDA).
- Provident Funds with minimum corpus of Rs.25 crores
- Pension Funds with minimum corpus of Rs. 25 crores
These entities are not required to be registered with SEBI as QIBs.
QIBs must be either domestic or foreign institutions.
Individuals are not permitted to be QIBs, regardless of their level of wealth or financial sophistication.