Adani Enterprises not to go ahead with FPO of shares worth ₹20,000 crore

Adani Enterprises Ltd (AELBoard )’s of Directors has decided not to proceed with the fully subscribed Follow-on Public Offer (FPO).

According to a press release, the company “aims to protect the interest of its investing community by returning the FPO proceeds and withdraws the completed transaction” due to the exceptional scenario and present market volatility. Gautam Adani, Chairman of Adani Enterprises Ltd, referred to the stock’s recent volatility and stated that the Board has decided not to proceed with the FPO in order to protect investors from any potential financial losses.

“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 has been extremely reassuring and humbling. Thank you,” he said.

“However, today the market has been unprecedented, and our stock price has fluctuated over the course of the day. 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,” he added.

Gautam Adani said company’s balance sheet is very healthy with strong cashflows and secure assets.
“We are working with our Book Running Lead Managers (BRLMs) to refund the proceeds received by us in escrow and to also release the amounts blocked in your bank accounts for subscription to this issue,” he said.

“Our 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. We are very confident that we will continue to get your support. Thank you for your trust in us,” he added.

Adani Enterprises shares fell substantially on Wednesday, a day after its follow-on public offer for subscription concluded.

The shares of Adani Group’s flagship company finished at Rs 2,179.75, a drop of 26.70%.
Its intraday low was Rs 1,941.2, which was more than 30% lower than the settlement price on Tuesday.
The Adani Enterprises follow-on public offer (FPO) was completely subscribed on Tuesday, the last day for subscription.

A follow-on public offering (FPO) is the sale of shares to investors by a company that is publicly traded on a stock exchange following its initial public offering.

Non-institutional investors led the demand for the FPO, according to data, and they subscribed to the shares 3.26 times. The part reserved for institutional investors was likewise sold out.

On Monday, an Abu Dhabi-based diversified conglomerate International Holding Company announced that it will invest about USD 400 million (AED 1.4 billion) into the Adani Enterprises’ follow-on public offer (FPO) through its subsidiary Green Transmission Investment Holding RSC Limited.

Adani Enterprises had filed a red herring prospectus with the markets regulator Securities and Exchange Board of India (SEBI) for the Rs 20,000 crore follow-on public offer (FPO), the largest ever in India.

There were concerns that the FPO may not receive a strong response from investors amid a report by a US-based Hindenburg Research that surfaced on January 24, which claimed the Adani Group of having weak business fundamentals among others.

The US-based firm, in its report, raised concerns about shares of Adani group companies having a possibility of declining from their current levels, owing to high valuations. In response, Adani Group on Sunday said the recent report by Hindenburg Research was not an attack on any specific company but a “calculated attack” on India, its growth story, and ambitions. It added the report was “nothing but a lie”.