Adani calls off $2.5B share sale after $86B stock rout
India's Adani Enterprises has called off its $2.5 billion share sale due to prevailing market conditions, the company said on Wednesday, days after a rout in its stocks following criticism by a US short-seller.
“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.
Gautam Adani, Chairman, Adani Enterprises Ltd, referred to the volatility in the stock over the last week and said the interest of the investors is paramount and to insulate them from any potential financial losses, the Board has decided not to go ahead with the FPO.
“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 has been extremely reassuring and humbling. Thank you,” he said.
“However, today the market has been unprecedented, and our 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,” he added. Adani said company's balance sheet is very healthy with strong cashflows and secure assets. “We are working with our Book Running Lead Managers (BRLMS) to refund the proceeds received by us in escrow and to also release the amounts blocked in your bank accounts for subscription to this issue,” he said.
The selloff in Adani group stocks and bonds resumed on Wednesday, as a rout in his companies deepened to $86 billion, with the billionaire also losing his title as Asia's richest person.
Wednesday's stock losses saw Adani slip to 15th on Forbes rich list with an estimated net worth of $75.1 billion, below rival Mukesh Ambani, the chairman of Reliance Industries Ltd who ranks ninth with a net worth of $83.7 billion.
Before the critical report by US short-seller Hindenburg, Adani had ranked third.
Shares in Adani Enterprises, often described as the incubator of Adani businesses, plunged 28 per cent on Wednesday, bringing its losses since the Hindenburg report to more than $18 billion. Adani Ports and Special Economic Zone dropped 19 per cent. “The kind of fall that we are seeing in Adani stocks is scary,” said Avinash Gorakshakar, head of research at Mumbai-based Profitmart Securities.
Adani Power and Adani Wilmar fell 5 per cent each, and Adani Total Gas slumped 10 per cent, with all three falling by their daily price limits. Adani Transmission was down 3 per cent and Adani Green Energy 5.6 per cent.
Underscoring the nervousness in some quarters, Bloomberg reported that Credit Suisse had stopped accepting bonds of Adani group companies as collateral for margin loans to its private banking clients.
“There was a slight bounce yesterday after the share sale went through, after seeming improbable at a point, but now the weak market sentiment has become visible again after the bombshell Hindenburg report,” said Ambareesh Baliga, a Mumbai-based independent market analyst. — agencies