Adani Enterprises Called off ₹20,000 Crore FPO On Wednesday 

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Adani Enterprises Called off ₹20,000 Crore FPO On Wednesday 
02 Feb 2023
5 min read

News Synopsis

The Adani Enterprises FPO (follow-on public offer) was decided to cancel in the midst of a storm brought on by Hindenburg Research's report. Gautam Adani posted an emotional appeal and defended the decision, claiming that it would not have been "morally correct" to do so given the decline in the company's stock price.

“For me, the interest of my investors is paramount and everything is secondary. Hence to insulate the investors from potential losses we have withdrawn the FPO,”  according to Gautam Adani, founder and chairman of Adani Enterprises.

Five of the nine Adani Group companies had reached their respective lower circuits as of Thursday morning at 10 a.m. Shares of Adani Enterprises also decreased by more than 5%.

The 20,000 crore FPO was cancelled by Adani Enterprises late on Wednesday night after its stock price experienced a severe sell-off and dropped by over 28% in response to reports that investment banker Credit Suisse would not accept bonds are issued by Adani Group companies as collateral for margin loans.

According to Adani, the business will reimburse investors who bought Adani Enterprises FPO subscriptions. In a filing with the exchange, he stated, “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,”

Qualified institutional buyers (QIB) and non-institutional investors quickly increased their subscriptions to the Adani Enterprises FPO, which was subscribed 1.12 times on the final day, ensuring the FPO's success. The retail industry, meanwhile, saw a membership rate of just 12%.

The Adani Group's exposure to the Hindenburg controversy has gotten worse; since January 24, when the first Hindenburg Research report was released claiming stock manipulation and accounting fraud, the aggregate market valuation of the nine group companies has fallen by 7.45 lakh crore.

The group's situation was made worse when Citigroup's wealth arm joined Credit Suisse on Thursday. According to reports, the company has stopped making margin loans on the bonds of Adani Group companies.

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