Adani Enterprises, led by Indian billionaire Gautam Adani, canceled its Rs 20,000 crore follow-on public offer (FPO) after the company’s stock price plummeted 28%. The decision was made by the company’s board of directors due to the unprecedented market volatility.
Adani Enterprises has decided not to go ahead with the fully subscribed FPO.
— Adani Group (@AdaniOnline) February 1, 2023
Fully subscribed FPO withdrawn
Despite a full subscription, the FPO was withdrawn to protect the interests of the investing community. The company will refund the FPO proceeds and release the amounts blocked in investors’ bank accounts. The FPO was under stress due to allegations of stock manipulation and accounting fraud made by short-seller Hindenburg Research.
Emphasis on a strong balance sheet
Adani Enterprises emphasized its strong balance sheet, secure assets, and impeccable track record of debt servicing. The company will continue to focus on long-term value creation and review its capital market strategy once the market stabilizes.
Retail investors avoided FPO
Although retail investors did not participate in the Rs 20,000 crore follow-on public offer (FPO), the largest in India to date, it still successfully pushed through with strong support from non-institutional buyers, including the family offices of wealthy individuals and top industrialists. Adani Enterprises is working with its Book Running Lead Managers to refund the proceeds and release the amounts blocked in investors’ bank accounts for the subscription.
Hindenburg impact
The follow-on public offer (FPO) of Adani Enterprises faced stress following a report from American short-seller Hindenburg Research, which made accusations of stock manipulation and accounting fraud. The report also warned of a potential 85% drop in stock value due to overvalued prices.
Despite these challenges, Adani Enterprises stated that their balance sheet is strong with consistent cash flows and secure assets, and they have a proven history of paying debts. The canceled FPO will not affect their current operations or future plans. The company plans to focus on long-term growth through internal resources and will reassess its capital market strategy once the market stabilizes.
