Adani Enterprises Scraps Fully Subscribed FPO, Says Going Ahead With Issue 'Morally Wrong'; Money To Be Returned To Investors

Adani Enterprises on Wednesday said it has decided to withdraw its fully subscribed Rs 20,000-crore follow-on public offer (FPO) and will return the proceeds to investors.    

The announcement came a day after the company's FPO was subscribed fully on the last day of the offer on Tuesday.    

'The Board of Adani Enterprises Ltd., (AEL) decided not to go ahead with the fully subscribed FPO," the Adani Group's flagship company said in a release titled 'Adani Enterprises Limited Stands by its Investors'.

"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," the company said.

The company said that it was working with its Book Running Lead Managers (BRLMs) to refund the proceeds received in escrow and to also release the amounts blocked in the investors' bank accounts for subscription to the issue.

As many as 4.62 crore shares were sought as against an offer of 4.55 crore. 

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) was almost fully subscribed, according to BSE data.

There was, however, muted response from retail investors and company employees.

Thanking the investors for their "support and commitment" to the FPO, Adani Group chairman Gautam Adani said, "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".

Adani Enterprises shares fell 26.7 per cent on Wednesday (1 February) Switzerland-based investment banking company Credit Suisse has stopped accepting bonds of Adani group as collateral for margin loans to its private banking clients. 

"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," Adani said.   

Adani said that the company's 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 stabilizes, we will review our capital market strategy," he said.

"We are very confident that we will continue to get your support. Thank you for your trust in us," the Adani Group chairman added.

Adani Group stocks have taken a beating on the bourses after US-based short seller Hindenburg Research in a report made a litany of allegations, including fraudulent transactions and share price manipulation, at the Gautam Adani-led group. 

Adani group has dismissed the charges as lies, saying it complies with all laws and disclosure requirements. It called the Hindenburg report baseless and has threatened to sue the the short seller.