UPDATE: Adani Wilmar IPO placed on hold by India’s regulators

A palm oil tree at a plantation in IndonesiaA palm oil tree at a plantation in Indonesia

This item was originally published on Sunday, 22 August 2021 at 23:54 SGT; it has since been updated to include comments from CGS-CIMB.

The proposed initial public offering (IPO) of Adani Wilmar (AWL), a 50:50 joint venture between the Adani Group and Singapore-listed Wilmar, has been put on hold by the Securities and Exchange Board of India, according to a posting on SEBI’s website.

SEBI’s weekly report listed the proposed IPO’s processing status as “issuance of observations kept in abeyance.” An issuance of observations would mean SEBI has provided a go-ahead for an IPO, but keeping it in abeyance means it is in suspension for 30 to 90 days, or potentially longer.

No other remarks were contained in the weekly report about the reason for the suspension, although other prospective IPOs on the list had comments explaining where SEBI was in the process.

In a statement Wilmar filed to SGX Sunday, Adani Enterprises said, “we have not received any formal communication from SEBI with respect to the IPO observations being kept in abeyance.”

“While we have always been fully compliant with applicable SEBI Regulations, we have made full disclosure to SEBI on specific information requests from them in the past. We will continue to cooperate with the regulators in the future,” Adani Enterprises said.

Bloomberg reported Sunday that Junior Finance Minister Pankaj Chaudhary told Parliament in July that some Gautam Adani-controlled firms were under investigation by SEBI for securities compliance issues, while the Directorate of Revenue Intelligence was probing Adani Group entities over compliance with local laws.

Wilmar said Sunday it is aware of media reports citing investigations against Adani Enterprises, the company which indirectly owns 50 percent of Adani Wilmar.

Wilmar added investors should exercise caution as there was no assurance the proposed IPO would proceed, citing factors including the book-building process, receipt of approvals required and prevailing market conditions.

Wilmar has previously said the proposed listing of Adani Wilmar would include an issue of new equity shares to raise up to 45 billion rupees, or around US$600 million, without any secondary offering.

CGS-CIMB said the delayed listing was a negative for Wilmar, as the listing of Adani Wilmar was one of the major catalysts the investment bank projected for the second half of this year.

The listing was expected to value Adani Wilmar at a market capitalisation of US$4 billion to US$6 billion, which would have valued Wilmar’s post-IPO-dilution stake of 45 percent at US$1.8 billion to US$2.7 billion, CGS-CIMB said in a note Monday.

Currently, Wilmar has its Adani Wilmar stake on its books at US$226 million as of end-2020, suggesting a potential gain of US$1.6 billion to US$2.5 billion, or S$0.33 to S$0.52 a share, the note said.

Shares of Wilmar were down 1.17 percent at S$4.22 at 10:20 a.m. SGT Monday.

Adani Wilmar isn’t the only potential IPO with the “issuance of observations kept in abeyance” status in SEBI’s weekly report: Go Airlines (India) also has the tag, with the note that clarifications are sought.