Adani follow up public offering

Adani’s problems worsen:

 The flagship drops by 28% and the group abandons its FPO

Gautam Adani’s personal net worth decreased by $14 billion to $74.7 billion at the conclusion of the day, moving him up to No. 15 on the Forbes billionaire list. With Adani Ports plunging 19.7%, all equities in the Adani Group were lower.

Adani Group companies were once more in a near free slide on Wednesday, a day the markets welcomed the Budget with a big bounce early on. The group said late at night that it has chosen to cancel the Rs 20,000 crore follow-on public offer (FPO) and return the money to investors as its flagship Adani Enterprises Limited fell 28.4%.

Timeline

This happened the day after its FPO barely made it with contributions from non-institutional investors including HNIs and industrialists’ family offices. And hours after the Swiss bank Credit Suisse Group AG reportedly stopped “accepting bonds of Adani Group entities as collateral for margin loans to its private banking clients,” according to a Bloomberg story.

Gautam Adani, the chairman of the Adani Group, dropped from No. 3 on the Forbes billionaire list to No. 15 at the end of the day with a personal net worth of $74.7 billion, down $14 billion from the previous day. With Adani Ports plunging 19.7%, all equities in the Adani Group were lower.

The company seeks to safeguard the interests of its investment community by returning the FPO funds and withdrawing the completed transaction, according to AEL’s statement: “Given the unprecedented scenario and the current market volatility.”

Company’s response

It quoted Gautam Adani, the company’s chairman, as saying: “Today’s market has been unprecedented, and our stock price has moved throughout the day… The company’s board decided against moving further with the problem because of these unique conditions since it would not be morally right. The investors’ best interests are of utmost importance, hence the board has decided against moving through with the FPO in order to protect them from any potential financial losses.

Adani stated, “We are working with our Book Running Lead Managers (BRLMs) to release the funds stopped in your bank accounts for subscription to this issue as well as to return the proceeds received by us in escrow.

Following allegations of “brazen stock manipulation and accounting fraud” in a research by US-based Hindenburg Research, the Adani group’s enterprises have seen their market capitalization drop by nearly Rs 7 lakh crore. Following the collapse in Adani shares, bank stocks were also negatively impacted. Markets are concerned about a further decline in Adani stock, and investors who contributed to the FPO put pressure on the issue’s withdrawal, according to a source in the market.

Adani asserted that the group has a flawless track record of repaying our debt and that its balance sheet is strong with strong cash flows and secure assets. “This choice won’t affect our ongoing activities or our future ambitions in any way. Growth will be controlled by internal accruals as we continue to concentrate on long-term value development. We will reevaluate our capital market approach after the market stabilises. We have every faith that you will continue to support us, Adani stated.

Text in its entirety of the Adani Group’s statement

Adani Enterprises Ltd.’s (AEL) Board of Directors voted against moving further with the fully subscribed follow-on public offer (FPO).

The Company returns the FPO money and cancels the completed transaction in an effort to safeguard the interests of its investment community in light of the exceptional scenario and the present market volatility.

“The Board takes this opportunity to thank all the investors for their support and dedication to our FPO,” stated Gautam Adani, Chairman of Adani Enterprises Ltd. Yesterday, the subscription for the FPO was successfully closed. Your trust and confidence in the Company, its operations, and its management have been incredibly encouraging and humbling notwithstanding the recent volatility in the stock. I’m grateful.

However, the market today has been unlike any other, and our stock price has changed throughout the day. The board of the Company determined that moving forward with the matter would not be morally right given these unique circumstances. The investors’ best interests are of utmost importance, hence the Board opted against moving through with the FPO in order to protect them from any potential financial losses.

We are working with our Book Running Lead Managers (BRLMs) to release the funds held in your bank accounts for subscription to this issue as well as the proceeds we received in escrow.

We have a highly solid balance sheet, good cash flows, safe assets, and a proven track record of repaying our obligations. No changes will be made to our current operations or our future plans as a result of this choice. Growth will be controlled by internal accruals as we continue to concentrate on long-term value development. We will reevaluate our capital market approach after the market stabilises. We have every faith that you will continue to support us. We appreciate your confidence in us.