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Adani FPO: Did the Hindenburg report make Adani cancel FPO?

Adani FPO: Adani to cancel its Rs. 20,000 crore FPO after Hidenburg’s accusations!!

Adani FPO: The Company experienced a fall after American short-seller Hindenburg Research accused the business of exploiting tax havens and raising debt issues. The Adani Group said on Wednesday that it will be canceling its Rs 20,000 crore Follow-On Public Offer (FPO) and returning the investors’ funds.

Just hours earlier, shares of companies owned by the Adani Group experienced a significant fall after American short-seller Hindenburg Research accused the business of exploiting tax havens and raising debt issues, causing extreme volatility in benchmark stock indices that rose when Finance Minister Nirmala Sithraman presented the Union Budget 2023.

“The Board of Directors of the Company at its meeting held today, February 1, 2023, has decided, in the interest of its subscribers, not to proceed with the further public offer (FPO) of equity shares aggregating up to Rs 20,000 crore of face value Rs 1 each on partly paid-up basis, which was fully subscribed,” Adani Enterprises said in an exchange filing.

“The Board takes this opportunity to thank all the investors for your support and commitment to our FPO. The subscription for the FPO closed successfully yesterday. Despite the volatility in the stock over the last week, your faith and belief in the Company, its business and its management have been extremely reassuring and humbling. Thank you,” Adani said in a press statement.

According to Gautam Adani, Chairman of Adani Enterprises, the decision was made in the midst of the swings that the group’s equities experienced during the day’s trading.

A day after opting against proceeding with the fully subscribed Follow-on Public Offer, Gautam Adani stated on Thursday that it would not be “morally correct” to proceed with the 20,000 crore share of Adani Enterprises in the current market environment (FPO). Following initial public offers, a firm listed on a stock exchange will issue shares to investors in an FPO.

“After a fully subscribed FPO, yesterday’s decision of its withdrawal would have surprised many. But considering the volatility of the market seen yesterday, the board strongly felt that it would not be morally correct to proceed with the FPO,” Gautam Adani said in his address to investors after the withdrawal of the fully subscribed FPO.

“Our balance sheet is healthy and assets robust. Our EBIDTA levels & cash flows have been very strong & we have an impeccable track record of fulfilling our debt obligations. We’ll continue to focus on long-term value creation & growth will be managed by internal accruals,” he said.

Read More- Is the Fall of Adani Here? Let’s find out

In response to the news that Credit Suisse no longer accepts Adani firms’ bonds as collateral for margin loans, Adani Enterprises experienced a nearly 26 percent drop, closing at Rs 2,180.20 per share on the BSE. Adani Ports, a different group stock, too experienced a 20% fall in price and closed at $492.15 per share. Ambuja Cements’ 16.56 percent drop to close at Rs 334.60 and ACC’s 5.96 percent drop to close at Rs 1,852 contributed to the group’s additional decline.

Following a $92 billion collapse in the value of the Adani group’s stock, the business pulled back on its record domestic public offering.

The shares of the Adani group, which have been under pressure for the previous five trading days due to worries about the report by US-based short-seller Hindenburg Research, continued to fall on Thursday after the Company opted to cancel the share offer.

Last Monday, Hindenburg Research charged the Adani group with being “brazen”. Market manipulation and accounting fraud caused a significant stock selloff. The businessman has consistently refuted the accusations, and his Company has referred to the information as “bogus” and made legal claims.

“For me, the interest of my investors is paramount & everything is secondary. Hence to insulate investors from potential losses, we’ve withdrawn FPO. This decision will not have an impact on our existing operations and future plans. We’ll continue to focus on timely execution,” he added.

He said that the choice would not have any effect on current operations or future plans. “We will continue to focus on the timely execution and delivery of projects. We have a strong focus on ESG, and every business of ours will continue to create value in a responsible way. The strongest validation of our governance principles comes from several international partnerships we have built across our different entities,” he added.

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Tamkeenat Rose

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