Adani Enterprises Calls off Fully Subscribed FPO; Shares Fall 15%

Delhi: Shares of Adani Enterprises tumbled 15% in morning trade on Thursday, a day after the firm 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 stock tanked % to Rs 1,809.40 on the BSE.

Other group firms also continued to remain weak for the 6th day in a row, with shares of Adani Ports declining 14%, Adani Transmission falling 10%, Adani Green Energy (10%), Adani Total Gas (10%), Adani Wilmar (5%), NDTV (4.99%) and Adani Power (4.98%).

Adani Enterprises Ltd's Rs 20,000 crore follow-on public offer managed to get investors on the last day of the share close on Tuesday. Late on Wednesday, the company decided to withdraw the FPO and refund the investors, the PTI reported.

"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," Adani said in an address to investors on Thursday. The decision, he said, will not have any impact on existing operations and future plans. "We will continue to focus on timely execution and delivery of projects."

While the portion of a follow-on share sale in Adani Enterprises Ltd reserved for anchor investors was fully subscribed last week, institutional and other non-retail investors helped the offer reach desired subscription levels hours before the sale closed, according to BSE data analysed by PTI.

As many as 5.08 crore shares were sought against an offer of 4.55 crore, even though the offer price was higher than the rate at which the company stock was being traded on the stock exchange.

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 subscribed 1.2 times, according to BSE data.

However, there was a muted response from retail investors and company employees. Retail investors, for whom roughly half of the issue was reserved, bid for just 12% of the 2.29 crore shares earmarked for them. Employees sought 55% of the 1.6 lakh shares reserved for them, PTI reported.

Overall, against 6.14 crore shares on offer, anchor and other investors bid for 6.45 crore.

The success of the issue took place even after Hindenburg Research's allegations called the offer into question. The Hindenburg report sparked a USD 70 billion cumulative loss for the stock of the Adani group in four trading sessions, according to the PTI.

Adani Enterprises' share price fell below the offer price on the opening day of the FPO last week after Hindenburg Research alleged that the group was "engaged in a brazen stock manipulation and accounting fraud scheme over the course of decades", PTI reported.

Billionaire Gautam Adani has said the decision to withdraw a fully subscribed share sale of the flagship firm of his group was primarily because of volatility in the market.

Adani Group company stocks have lost over USD 90 billion in value since a US short seller made the allegations.

(With PTI Inputs)