NEW DELHI: Gautam Adani pulled off a closely watched US$2.5bil equity sale for his flagship company, largely thanks to existing shareholders, earning the Indian billionaire some reprieve after his empire was rocked by fraud allegations from short seller Hindenburg Research.

The offering by Adani Enterprises Ltd was India’s largest follow-on share sale, and was fully subscribed on the final day, aided by a last-minute surge in demand from institutional investors.

Interest from retail investors, whom Adani was hoping to attract, was notably weak.

While the sale’s completion is a victory for Adani after Hindenburg’s allegations cast a shadow over the offering, it’s unlikely to fully dispel investor concerns about the conglomerate’s corporate governance.

The market values of Adani’s listed companies are down about US$69bil since Hindenburg alleged Adani used a web of firms in tax havens to inflate revenue and stock prices.

The fully subscribed offering nonetheless removes one overhang for India’s US$3.2 trillion stock market, which recently dropped out of the world’s five biggest by value.

The benchmark S&P BSE Sensex eked out gains over the past two days after tumbling on the Hindenburg report last week.

Adani has denied the short seller’s allegations.

“One concern of the market seems to be out of the way now,” said Deepak Jasani, head of retail research at HDFC Securities Ltd. “They have been able to convince high-net-worth individuals and deep-pocketed people to take exposure.”

Apart from existing Adani shareholder Abu Dhabi International Holding Co (IHC), which accounted for 16% of the purchases in the offering, anchor investors like Life Insurance Corp of India and an arm of Goldman Sachs Group Inc also ploughed money in.

A team of more than 60 people at the Adani Group worked on the share sale, with some asked to regularly brief global and domestic investors to allay concerns raised by the short seller’s report, according to a person familiar with the matter.

On Saturday, the group had major roadshows with regional investors in Adani’s home state of Gujarat to convince them about the stock’s potential, another person said.

Several high-net-worth individuals offered help to the Adani Group, that person said. A representative for the Adani Group didn’t comment.

However, the weak uptake from individual investors - they bid for a little over 10% of the shares offered to them - undermines a key goal of the offering to broaden Adani Group’s investor base.

Chief financial officer Jugeshinder Singh said in November that after tapping strategic investors in recent years, the conglomerate was looking for a wider investor base that didn’t mind a company investing in long-term projects that can take time to show returns.

The order books for institutional and retail investors opened within days of Hindenburg’s report.

The allegations led to a massive selloff in the shares of the Adani Group, sending the flagship’s stock below the offer price of the sale.

Failure to meet the fundraising goal would have been a major blow to Adani’s prestige and would have heightened concerns about the conglomerate’s debt load.

IHC, which is controlled by a key member of Abu Dhabi’s royal family, said on Monday it will invest about US$400mil .

That follows an almost US$2bil investment by IHC in Adani’s companies last year.

“Our interest in Adani Group is driven by our confidence and belief in the fundamentals of Adani Enterprises,” IHC’s chief executive officer Syed Basar Shueb said in a statement.

“Now that Adani’s follow-on public offer is out of the way, investors’ focus may start shifting back to India’s growth story,” said Sumeet Rohra, a fund manager at Smartsun Capital Pte in Singapore.

 - Bloomberg