Adani Enterprises calls off fully subscribed FPO, to return money to investors

New Delhi: Adani Enterprises on Wednesday said it has decided not to go ahead with its Rs 20,000-crore Follow-on Public Offer (FPO) and will return the proceeds to investors.

The announcement comes a day after the Adani 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. 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 in a statement.

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) were almost fully subscribed, according to BSE data.

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

Retail investors, for whom roughly half of the issue was reserved, bid for just 11 per cent of the 2.29 crore shares earmarked for them. Employees sought 52 per cent of the 1.6 lakh shares reserved for them.

Adani Enterprises, the flagship company of the Adani Group, had a lacklustre start to its FPO, with only a 1 per cent subscription on the first day of the share sale. The offer was opened for public subscription from January 27-31.

"Today the market has been unprecedented, and the company's 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," Gautam Adani, Chairman, Adani Enterprises, said.

The company said it is working with book running lead managers to refund the proceeds received in its escrow accounts and also working towards releasing the amounts blocked in investors' bank accounts for subscription to this issue.

Adani also said the company's balance sheet is very healthy with strong cash flow and secure assets, and has an "impeccable track record" of servicing its 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 stabilises, we will review our capital market strategy," the statement said.

Meanwhile, shares of Adani Group firms slumped on Wednesday and have lost more than Rs 7 lakh crore of their combined market capitalisation in the last five trading sessions amid concerns over US-based short seller Hindenburg Research's report.

The decline is about 38 per cent compared to the market valuation at the end of trading on January 24, the day the report was released.

Moreover, Adani Enterprises nosedived 28.45 per cent to settle at Rs 2,128.70 on the exchange.

Adani Group stocks have taken a beating on the bourses after Hindenburg Research made a litany of allegations in its report, 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 short seller.