Following another day of rout for all its group shares, Adani Group has cancelled its Follow-On Public Offering (FPO) for Adani Enterprises.
The FPO was over-subscribed on the final day on Tuesday despite muted response since the publication of the damning Hindenburg Research, which alleged that the company was involved in various fraudulent activities, including stock market manipulation, involvement of several shell companies and multiple instances of related party loans.
In an exchange filing, Adani Group said it will return money to its investors.
Adani Group calls off FPO
“The Board of Directors of the Company has decided, in the interest of its subscribers, not to proceed with the further public offer (FPO) of equity shares aggregating up to IR20,000 crore ($2.5bn) of face value Rs 1 each on partly paid-up basis, which was fully subscribed,” the statement said.
“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.”
Gautam Adani, Chairman, Adani Enterprises, said in a statement: “The Board takes this opportunity to thank all the investors for your support and commitment to our FPO.
“The subscription for the FPO closed successfully yesterday. Despite the volatility in the stock over the past week, your faith and belief in the Company, its business and its management has been extremely reassuring and humbling.
“However, today the market has been unprecedented, and our stock price has fluctuated over the course of the day. Given these extraordinary circumstances, the board felt that going ahead with the issue will not be morally correct.
“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.”
On the Bombay Stock Exchange (BSE), Adani Enterprises was down by 28.2 percent to close at IR2,128 ($26.11), following reports that Credit Suisse has stopped accepting bonds of Adani companies as collateral for margin loans.
The share price has now fallen well below the offer price of the FPO. The company was selling the shares in a price band of IR3,112-3,276 ($38-$40).
Another group company, Adani Ports, hit the 20 percent lower circuit to end at IR492.15 ($6.01). Ambuja Cements slumped 16.56 percent to close at IR334.60 ($4.08).
Out of the 4,55,06,791 fresh shares on offer, bids were received for 5,08,68,352 shares or 112 percent. Uptake from retail investors for the FPO was weak, but institutions and High Networth Individuals made up for their lack of participation.
Bloomberg reported that several business houses and individuals, including Sajjan Jindal and Bharti Group’s Sunil Mittal, subscribed to the follow-on offering in a last-minute push.
Adani Group has dismissed Hindenburg’s charges as lies, saying it complies with all laws and disclosure requirements. It called the report baseless and has threatened to sue the company.
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