Adani Enterprises cancels FPO, to refund investors

Adani Enterprises Ltd (AEL) unexpectedly called off its ₹20,000-crore follow-on public offer (FPO) on Wednesday evening, a day after the company closed the offer successfully. The decision followed a 28.5% plunge in its shares in Wednesday trade that resulted in the stock trading at 31.6% below the lower end of the FPO price band of ₹3,112-3,276 apiece. The company said it will return the money collected from investors in the 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 told exchanges after a board meeting Wednesday evening.

No Impact on Existing Ops, Future Plans: Co

Adani Enterprises chairman Gautam Adani said it is working with the book running lead managers (BRLMs) to the issue to refund the proceeds and release the amounts blocked in investors' bank accounts for subscription to this issue.

"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," Adani said in the exchange disclosure.

"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 said.

Adani Enterprises may have come under pressure from institutional investors in the FPO following the tumble in its stock prices on Wednesday, said market experts. This could not be verified independently. Adani Enterprises declined as much as 34% intraday before recovering slightly to close at ₹2,128.70.

The FPO was fully subscribed on the final day of the offer, Tuesday, January 31, with late demand from family offices, corporates, and foreign investors. The issue - India's biggest FPO - was subscribed 1.12 times. However, domestic institutions, including mutual funds, and most retail investors stayed away from the FPO as the issue price was above the Adani Enterprises stock price. The shares earmarked for retail investors and employees were undersubscribed. Retail investors bid for 12% of the shares allocated to them, whereas it was 54% for the employees' quota.

Adani said the decision to withdraw the FPO will not have any impact on its "existing operations and future plans".

"Our balance sheet is very healthy with strong cash flows and secure assets, and we have an impeccable track record of servicing our debt," he said. "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."

On Monday, Abu Dhabi-headquartered International Holding Company (IHC) announced an investment commitment of $400 million, or roughly ₹3,200 crore, in the FPO through its subsidiary Green Transmission Investment Holding RSC.

A day after release of Hindenburg's report, the company raised ₹5,985 crore from anchor investors ahead of the FPO by allotting 18.3 million shares at 3,276 each to 33 institutional investors.