Adani Enterprises has called off its follow-on public offer (FPO) worth Rs 20,000 crore a day after it got fully subscribed. The company assured that money will be returned to those who had subscribed for the issue.
On Tuesday, the share sale was subscribed 1.12 times despite dull participation from retail investors. The company cited 'unprecedented situation' and 'current market volaltility' for calling off the FPO which was incidentally the largest FPO in India so far.
In a statement, Gautam Adani, Chairman of Adani Enterprises, said, “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," said Gautam Adani, Chairman, Adani Enterprises.
The FPO cancellation comes hours after Adani Group shares were badly hammered on the bourses on budget day. Adani Enterprises, Adani Group's flagship company, fell as much as 35 per cent during the day's trade before closing at Rs 2,179.75. The closing price was way lower than the FPO’s lower price band of Rs 3,112.
Earlier in the day, it was reported by Reuters that Securities and Exchange Board of India (SEBI) is looking into potential irregularities Adani Enterprises FPO and the crash in Adani Group stocks. Notably, Trinamool MP Mahua Moitra had written to the SEBI earlier this week, asking the regulator to look into the allegations against Adani Group.
The sharp fall in Adani Group shares on Wednesday came after global brokerage firm Credit Suisse assigned zero lending value to its bond. This signalled a global scrutiny of the Gautam Adani-led conglomerate, continuing the trend started by American short-seller Hindenburg last week.
Since the short-seller raised allegations of fraud, market manipulation and illegal offshore activities, the conglomerate helmed by Gautam Adani has reportedly lost more than $86 billion in market capitalisation in a matter of five trading sessions. However, Adani Group had denied all the allegations raised by Hindenburg, and termed its apparent findings as malicious and based on mala fide intentions.