Gautama Adani has justified canceling theAdani Enterprises FPO (next public offer), saying it wouldn’t have been “morally correct” to go through with it.- Adani Enterprises called off its ₹20,000 crore FPO late Wednesday after its share price witnessed an extreme sell-off and fell by more than 28%.
- The company said it will return funds to investors who subscribed to the FPO.
In the middle of a storm caused by the report of Hindenburg Research, Gautam
“For me, the interests of my investors come first and everything comes second. Therefore, we have withdrawn the FPO to protect the investors from potential losses,” said Gautam Adani, Founder and Chairman of Adani Enterprises.
As of 10 a.m. on Thursday, five of the nine Adani Group companies reached their respective lower circuits. Shares of Adani Enterprises also fell more than 5%.
Adani Enterprises called off the ₹20,000 crore FPO late Wednesday evening after its share price witnessed an extreme sell-off by more than 28% triggered by reports from investment banker Credit Suisse saying it will not accept bonds from Adani Group companies as collateral for margin loans.
Adani said the company will return funds to investors who applied to the Adani Enterprises FPO. “We are working with our Book Running Lead Managers (BRLMs) to refund the proceeds received by us in escrow and also to release funds that have been held in your bank accounts for subscription to this release,” he said in an exchange request. .
Adani Enterprises’ FPO succeeded on its final day thanks to a rapid increase in subscriptions from qualified institutional buyers (QIB) and non-institutional investors – the FPO was subscribed 1.12 times. On the other hand, in the retail category, there was only 12% subscription.
Hindenburg sortie worsens, Adani becomes distressed
The fallout from the Hindenburg battle has worsened for the Adani Group – the nine group companies have seen a drop of ₹7.45 lakh crore in their combined market capitalization since January 24, when the first Hindenburg Research report was released claiming that there share manipulation and accounting fraud.
To make matters worse for the group, Citigroup’s wealth arm joined Credit Suisse on Thursday — the company has done just that Reportedly stopped margins on bonds issued by Adani Group companies.
According to a Bloomberg According to the report, the bonds of Adani group companies have reached distressing levels, falling as low as 70 cents on the dollar. Yields also increased dramatically to over 30% in the secondary markets, while junk bond yields reached 8.14%.
The drop in Adani Group share prices has also had a huge impact on Gautam Adani’s wealth – from being the third richest person in the world at the start of 2023, he is now in the 13th position. His net worth has dropped from $48.5 billion to $72.1 billion so far this year and he is also no longer the richest Indian after Mukesh Ambani whose net worth currently stands at $81 billion.
Despite the rapid fall in shares of his companies, Adani put on a confident front saying, “The fundamentals of our company are strong. Our balance sheet is healthy and our assets are robust. Our EBITDA levels and cash flows are very strong and we have an impeccable track record of meeting our debt obligations.”
Adani said the group will manage growth with internal accruals for now, and that the future strategy will be reviewed once markets stabilize.
ALSO SEE:
Gautam Adani takes the high road and calls off Adani Enterprises FPO after 28% crash in share price
Income tax bonanza, capex push emerge as the stars of Budget 2023-24
Adani Group shares are witnessing high volatility amid a battle of words between the company and Hindenburg Research