Adani Ant withdraws FPO in U-turn

Billionaire Gautam Adani’s flagship is now working on returning the money raised from investors lying in an escrow account.

In an announcement to the stock exchanges late on Wednesday, Adani Enterprises said, “Given the unprecedented situation and current market volatility, the company aims to protect the interests of its investment community by repatriating the FPO proceeds and rolling back the completed transactions.” Is.”

Adani Enterprises Chairman Gautam Adani said that the subscription to the FPO was successfully closed on Tuesday. “Despite the volatility in the stock during the past week, your (investors’) faith and trust in the company, its business and its management has been extremely reassuring and humbling…. However, today, the market has been phenomenal, and during the day Our share price has fluctuated. In view of these extraordinary circumstances, the Board of the Company felt that it would not be ethically correct to proceed with the issue.”

The company’s withdrawal came on a day when shares of Adani Enterprises plunged nearly 29%, dealing a huge blow to institutional investors and family offices, who saved the offer on the last day.

A senior banker affiliated with a foreign bank said on the condition of anonymity, “Anchor and HNI investors, who have put in most of the money in the FPO, are hell to pay, taking a 30% haircut from day one.” “The only way to salvage the situation was to close the FPO.”

A senior fund manager termed the withdrawal as a “disaster”, indicating that investors in the offering had become “uncomfortable” following the steep decline. It may also affect the group’s ability to raise capital.

However, founder Gautam Adani said, “This decision will have no impact on our current operations and future plans.” We will continue to focus on long-term value creation, and growth will be managed by internal resources. Once the market stabilises, we will review our capital market strategy.”

He added that the company is working with investment bankers to return the share subscription funds. “Our balance sheet is very healthy with strong cash flows and secured assets, and we have an impeccable track record of servicing our debt,” Adani said.

A day after it was said to have helped some family offices bail out Adani Enterprises FPO, the Swiss bank has refused to accept Adani Group’s bonds as collateral for margin loans in light of Hindenburg Research’s corporate fraud allegations. On the denial report, investors dumped shares of Frontline Group. The group has contested elections.

Stocks like Adani Ports hit 52-week low 459.50, Adani Enterprises, Ambuja Cements, ACC and Adani Total Gas fell, a combined wipe out 1.84 trillion worth of investor wealth in the group’s shares on Wednesday. The extent of the loss suffered by the group’s market cap in the last five days 7.56 trillion, and after Wednesday’s debacle, founder Gautam Adani handed over the richest Indian title to RIL chairman Mukesh Ambani.

Adani has become the 15th richest person in the world in the Forbes billionaires list, his wealth has decreased by $ 14 billion to $ 74.7 billion. Adani Ports declined by 19.2% 495.15, Ambuja Cements fell up to 16.7% 334.10, down 6.19% in the ACC 1,846.45 and Adani Total Gas up to 10% 1,897.40.

Adani Enterprises was the most traded stock on NSE 3,436 crore, followed by Ambuja Cements and Adani Ports as the third and fourth most traded stocks. 2,775 crore and 2,536 crore respectively.

Adani’s debacle in frontline stocks had a cascading effect on PSU bank stocks like State Bank of India, Bank of Baroda and Punjab National Bank, which slipped 5-8%.

Even after Wednesday’s fall, the outlook for the group’s shares remained gloomy.

“Investors in Adani Ports, Adani Enterprises, ACC and Ambuja Cements are worried about the fallout of the Hindenburg report, as a result of which they are rushing to exit together,” said a fund manager. Only on the cash market, those that trade in both cash and derivatives segments—Adani Ports, Adani Enterprises, ACC and Ambuja Cements—have no price circuit, which means their prices can swing more wildly.

For example, the promoter pledge at Adani Ports stands at 19.25% after pledging 3.25% on January 27 and January 31.

The increase in shorting escalated to such an extent that Ambuja Cements is restricted for trading in the F&O contracts segment as it has crossed the exchange limit in terms of the number of outstanding shares being held by clients.