Gautam Adani takes the high road and calls off Adani Enterprises FPO after a 28% crash in stock price

• Gautam Adani-led Adani Enterprises has called off its ₹20,000 crore follow-on public offer (FPO).
  
• This is after the company’s stock witnessed a 28% crash on Wednesday.
  
• The company said in its exchange filing that it will return money to investors.
  

Gautam Adani-led Adani Enterprises has called off its ₹20,000 crore follow-on public offer (FPO) after the company’s stock witnessed a 28% crash on Wednesday. The company said in its exchange filing that it will return money to investors.

Adani Enterprises’ shares came under immense selling pressure on Wednesday, and ended the day with a decline of 28%. Gautam Adani, the company’s founder and chairman, called it “unprecedented”.

“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,” said Adani.

One of the triggers behind today’s fall were reports of investment banker Credit Suisse no longer accepting bonds of Adani Group companies as collateral for margin loans.

The investment banker has reportedly assigned a zero lending value to notes of Adani Ports & SEZ, Adani Green Energy, and Adani Electricity Mumbai. Curiously, the banker upgraded the rating of Adani Ports & SEZ on Tuesday to “outperform” from “neutral”.

Adani Enterprises’ FPO witnessed cold reception until Day 2, but qualified institutional buyers (QIB) and non-institutional investors bailed it out on the last day.

Retail investors showed the least amount of interest, however, given that the stock price of Adani Enterprises was 4% below the lower limit of the FPO band of ₹3,112. All in all, the retail category witnessed only 12% subscription.

“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,” Adani said in the exchange filing.

Since the Hindenburg Research report was released on January 24, the rout in Adani Group shares has led to a $86 billion decline in the group’s combined market capitalisation. A Reuters report states that market regulator Securities and Exchange Board of India (SEBI) is looking into the matter.

SEE ALSO:

Adani Enterprises’ ₹20,000 crore FPO fully subscribed on the last day

Income tax bonanza, capex push emerge as the stars of Budget 2023-24

Adani Group stocks witness high volatility amidst war of words between the company and Hindenburg Research