Adani Enterprises has announced withdrawal of its Rs 20,000-crore follow-on public offer (FPO) amid current market volatility. The FPO had sailed through on the last day.

“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,” said Adani Enterprises in a stock exchange filing. The firm’s stock closed trading on Wednesday 28.5% lower at Rs 2,128.70. Adani Enterprises sold shares in a price band of Rs 3,112-Rs 3,276. Shares of Adani Enterprises are down over 49% from their 52-week high. The stock is down over 37% in just one week.

As many as 5.08 crore shares were sought against an offer of 4.55 crore, even though the offer price was higher than the rate at which the company stock was being traded on the stock exchange. Non-institutional investors put in bids for over three times the 96.16 lakh shares reserved for them, while the 1.28 crore shares reserved for qualified institutional buyers (QIBs) were subscribed 1.2 times, according to BSE data.

There was, however, a muted response from retail investors and company employees. Retail investors, for whom roughly half of the issue was reserved, bid for just 12 per cent of the 2.29 crore shares earmarked for them. Employees sought 55 per cent of the 1.6 lakh shares reserved for them.

Gautam Adani, Chairman, Adani Enterprises Ltd said, “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 last week, your faith and belief in the Company, its business and its management has been extremely reassuring and humbling. Thank you. However, today the market has been unprecedented, and our stock price has fluctuated over the course of the day. Given these extraordinary circumstances, the Company’s 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.”

He said the company is working with its “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”.

The share plunge was sparked by a report by Hindenburg Research last week which alleged improper use by the Adani Group of offshore tax havens and stock manipulation. It also raised concerns about high debt and the valuations of the seven listed Adani companies.

The group has denied the allegations, saying the short-seller’s narrative of stock manipulation has “no basis” and stems from an ignorance of Indian law. It has always made the necessary regulatory disclosures, it added.

“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 stabilises, we will review our capital market strategy. We are very confident that we will continue to get your support. Thank you for your trust in us,” said Adani.

While the portion of a follow-on share sale in Adani Enterprises Ltd reserved for anchor investors was fully subscribed last week, institutional and other non-retail investors helped the offer reach desired subscription levels hours before the sale closed, according to data available from BSE.

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IE&M Team
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