A day after it was completely subscribed, Adani Enterprises Ltd. announced that it has cancelled its 20,000 crore follow-on share offer. In light of recent market volatility, the company announced that it had cancelled the follow-on public offering (FPO) and would be paying investors their FPO proceeds back.
Adani Enterprises cancels FPO, investors will receive their money back
Companies that have already gone public use FPOs to diversify their equity shareholding.
“The market today has been unheard of, and our stock price has changed throughout the day. The company’s board decided against moving further with the problem because of these unique conditions since it would not be morally right. The board has decided not to proceed with the FPO because the interests of the investors are of the utmost importance and in order to protect them from any potential financial losses “Gautam Adani, the chairman of Adani Enterprises, said in the statement.
Mr. Adani praised investors for their dedication to and support of the FPO, noting that yesterday’s subscription close was a success.
He remarked, “Your faith and belief in the firm, its business, and its management has been tremendously reassuring and humbling, notwithstanding the volatility in the stock over the previous week.
Yesterday saw a continuation of the sell-off in Adani Group stocks and bonds, with shares in Adani Enterprises falling 28% and Adani Ports and Special Economic Zone falling 19%, both having their worst day ever.
In the statement, Mr. Adani stated, “We are working with our book running lead managers to reimburse the money received by us in escrow and to also release the amounts blocked in your bank accounts for subscription to this issue.
“We have a very solid balance sheet, good cash flows, safe assets, and an excellent track record of repaying our obligations. No changes will be made to our current operations or our future plans as a result of this choice. Our continued attention will be on creating long-term value, and internal accruals will control expansion. We will reevaluate our capital market approach after the market stabilises. We have every faith that you will continue to support us. We appreciate your confidence in us.” Adani said.
Yesterday’s FPO went off without a hitch, despite a damning report by US-based short-seller Hindenburg that destroyed shares of Adani group firms. Concerns about the company’s substantial debt load and alleged improper use of tax havens were raised in a report released by Hindenburg Research on January 24. Adani has referred to the report as unfounded.