Adani Group cancels $2.5 billion follow-on public offering

Published February 1st, 2023 - 09:45 GMT
Adani Group cancels FPO
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ALBAWABA — India's Adani Group cancelled a $2.5 billion follow-on public offering on Wednesday with its chairman saying it would not be "morally correct" to continue after the group's flagship firm's share price slumped even further.


The group has suffered a five-day rout following explosive allegations of accounting fraud, among other issues, by United States-based short-seller Hindenburg Research.


The allegations wiped out over $92 billion from the value of the conglomerate's listed units, Bloomberg said, while its founder Gautam Adani's personal fortune dropped by more than $40 billion.


The FPO in Adani Enterprises had intended to raise funds to pay down borrowing and broaden its shareholder base but small investors stayed away as the market price dropped below the offer range.


Bloomberg reported that the FPO was only fully subscribed after support from Abu Dhabi-based International Holding Company and fellow Indian tycoons Sajjan Jindal and Sunil Mittal.


News that Swiss banking giant Credit Suisse had stopped accepting Adani bonds as collateral for loans it advances to private banking clients tumbled Adani Enterprises' share price 28.20 percent, closing at 2135.35 on the Mumbai stock exchange.


In a late-night statement, the Adani Enterprises board said it had decided not to proceed with the share sale "in the interest of its subscribers" and all payments would be refunded.


"Given these extraordinary circumstances, the company's board felt that going ahead with the issue would not be morally correct," Adani said. "Our balance sheet is very healthy with strong cashflows and secure assets and we have an impeccable track record of servicing our debt."


Despite the volatility in the stock over the last week, faith and belief in the company, its business and its management by faithful investors was extremely reassuring and humbling, Adani added.

Adani Total Gas dropped another 10 percent to 1897.40, forcing the Bombay Stock Exchange to suspend trade in the stock, Adani Ports crashed 19.18 percent to 495.15, while Adani Power slumped 4.98 percent to 212.65 and Adani Wilmar fell 5 percent to 443.6 at market closing.


The decision to call off the share sale "will not have any impact on our existing operations and future plans", Adani said in the statement.

"We will continue to focus on long term value creation and growth will be managed by internal accruals. Once the market stabilizes, 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," Adani added.



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