INDIA. Mumbai: Adani Enterprises said on February 1 that it has cancelled its follow-on public offering (FPO) and will return money to its investors. The decision came amid ongoing controversy that erupted after American short seller, Hindenburg Research, accused the company of using tax havens and flagged debt concerns in a report.
In a letter to BSE Limited and National Stock Exchange of India Limited, Jatin Jalundhwala, Company Secretary and Joint President (Legal), stated that, in the interest of its subscribers, it was decided not to proceed with the FPO (scrip code 512599, ADANIENT) of equity shares aggregating up to Rs 20,000 crore in face value on a partly paid-up basis, which was fully subscribed.
In a media release, Gautam Adani, Chairman of Adani Enterprises, said that given the unprecedented situation and the current marketing volatility, the company aims to protect the interests of the investing community by returning the FPO proceeds and withdrawing the completed transaction. This decision will not impact our existing operations or plan.
He said that the company is working with its Book Running Lead Managers (BRLMs) to return the money it received in escrow and free up the money held in investors’ bank accounts because they subscribed to this issue.
“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 have been extremely reassuring and humbling. Thank you,” Adani said.
“However, today, the market has been unprecedented, and our stock price has fluctuated. Given these extraordinary circumstances, the company’s board felt that going ahead with the issue would 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,” Adani stated.
Hindenburg Research accused the Adani Group of using offshore tax havens and stock manipulation and also raised concerns about its high debt and the valuations of its seven listed companies.
However, the Adani Group denied the allegations, saying the short-sellers’ narrative of stock manipulation had “no basis” and it stemmed from ignorance of the law. It has always made the required regulatory disclosures, according to the release.
Due to the Hindenburg impact, the Adani Group has already suffered a stock loss of Rs 8.8 lakh crore. Its stocks were down up to 60 per cent from their respective 52-week highs, wiping out more than $100 billion from their cumulative market capitalization.
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