Adani Enterprises calls off FPO, money to be returned to investors

The decision to not proceed with the FPO despite full subscription was taken at a meeting of the board of directors of the company today.

“Given the unprecedented situation and the current market volatility the company aims to protect the interest of its investing community by returning the FPO proceeds and withdrawing the completed transaction,” the company said in a statement.

Citing the unprecedented crash in stock prices, Adani Enterprises Chairman Gautam Adani said the board felt that going ahead with the FPO would not be morally correct under the extraordinary circumstances.

Also Read: Credit Suisse says won’t accept Adani bonds as collateral

“The interest of the investors is paramount and hence to insulate them from any potential financial losses, the Board has decided not to go ahead with the FPO,” Adani said in the statement.

Despite retail investors staying away from the Rs 20,000 crore FPO, which was India’s largest so far, the issue had managed to sail through with strong support from non-institutional buyers, which included family offices of various HNIs and top industrialists.”We are working with our Book Running Lead Managers (BRLMs) to refund the proceeds received by us in escrow and to also release the amounts blocked in your bank accounts for subscription to this issue,” Adani said.

The FPO was under stress following a damaging report by American short-seller Hindenburg Research which made several allegations relating to stock manipulation and accounting fraud against the ports-to-energy conglomerate and even warned against 85% downside purely on a fundamental basis owing to sky-high valuations.

“Our balance sheet is very healthy with strong cashflows and secure assets, and we have an impeccable track record of servicing our debt. This decision will not have any impact on our existing operations and future plans. We will continue to focus on long term value creation and growth will be managed by internal accruals. Once the market stabilizes, we will review our capital market strategy,” the 60-year-old Adani said.

Adani Enterprises calls off FPO, shares worth Rs 20,000 crore to be returned to investors

India’s Adani Enterprises has called off its $2.5 billion share sale due to prevailing market conditions, the company said on Wednesday, days after a rout in its stocks following criticism by a U.S. short-seller. “Given the unprecedented situation and the current market volatility the Company aims to protect the interest of its investing community by returning the FPO proceeds and withdraws the completed transaction,” the company said in a statement.

Earlier in the day, a Reuters report had said that market regulator Sebi is looking into any possible irregularities in the FPO and a full-scale examination of the fall in shares.

In the last five trading sessions, the market capitalisation of all 10 listed Adani companies are down by Rs 7.5 lakh crore or one-third. Shares of Adani Enterprises itself are down nearly 50% from its 52-week high after a gravity-defying rally in the last few years. The stock, which entered Nifty last year, ended 28.45% down at Rs 2,128.70 today.

Adani Enterprises FPO, which closed yesterday, was oversubscribed 112% as funds started pouring in at the list minute. While the demand from retail investors was low at just 12%, the non-institutional investor category was oversubscribed 3.32 times while that of qualified institutional buyers (QIB) was also oversubscribed 126%.

FPO applicants were to pay 50% money upfront while the rest in subsequent tranches. Retail investors were offered a discount of Rs 64 per share in the issue.