New Delhi: Edible oil company Adani Wilmar Ltd (AWL) has reduced the size of its initial share sale from the previously planned Rs 4,500 billion to Rs 3,600 billion, people familiar with the development announced on Friday. The company, which sells cooking oils under the Fortune brand, is expected to go public (IPO) this month, they added.
AWL is a 50:50 joint venture between the Ahmedabad-based Adani Group and the Singapore-based Wilmar Group.
Now the initial public offering will include a new issue of shares valued at Rs.3,600 billion. There will be no second offer.
According to the draft of the Red Hering prospectus, it aimed to raise Rs 4,500 billion from the market by issuing new shares.
The company has only reduced the proportion of general corporate purposes and not the core issue of the issue.
Of the proceeds from the IPO, Rs.1,900 billion will be used for investments, Rs.1,100 billion for debt repayment and Rs.500 billion to finance strategic acquisitions and investments.
When contacted to confirm the development, a company spokesman declined to comment.
The move to reduce the IPO volume is viewed as a good move by investors as optimizing the issuing volume will help the company achieve better return on investment (ROCE) and return on equity (ROE).
This shows the operational leverage and efficiency the company can demonstrate with minimal investment, and it also shows the revenue the company can generate and generate returns with minimal capital investment.
Despite the reduction in issuing volume, the company will be inundated with high levels of cash generation as it will repay the entire long-term borrowing of Rs 1,100 billion and save interest costs and will also finance all capital expenditure (capital expenditure) through equity.
AWL, one of the leading food FMCG companies in India with sales of Rs.37.195 billion, plans to aggressively examine the food merger and acquisition (M&A) prospects. The company may acquire a brand or company that operates in the grocery, staple food, and value-added product categories.
Six companies in the Adani Group are currently listed on domestic stock exchanges. In addition to Adani Enterprises, other listed companies are Adani Transmission, Adani Green Energy, Adani Power, Adani Total Gas and Adani Ports and Special Economic Zone.