By – Raju Vernekar
Mumbai, Feb. 2:
Adani Enterprises on Wednesday, February 01, said that it has cancelled its Follow-On Public Offering (FPO) and will return money to its investors, amid ongoing controversy that erupted after American short seller, Hindenburg Research, accused the company of using tax havens and flagged debt concerns in a report.
In a letter to BSE Limited and National Stock Exchange of India Limited, Jatin Jalundhwala, Company Secretary and Joint President (Legal) stated that, in the meeting of the Board of Directors of the company, held on February 01, in the interest of its subscribers, it was decided not to proceed with FPO (scrip Code 512599, ADANIENT) of equity shares aggregating up to Rs 20,000 crore of face value Re one on partly paid up basis, which was fully subscribed.
In a media release, Gautam Adani, Chairman, Adani Enterprises said that given the unprecedented situation and the current marketing volatility, the company aims to protect the interest of investing community by returning the FPO proceeds and withdraws the completed transaction. This decision will not have any impact on our existing operations and future plan.
The company is working with its Book Running Lead Managers (BRLMs) to refund the proceeds received by it in escrow and to also release the amounts blocked into investors’ bank accounts for subscription to this issue, he stated.
“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,” Adani 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”, Adani stated.
Hindenburg Research, accused the Adani Group of using offshore tax havens and stock manipulation and also raised concerns about high debt and the valuations of its seven listed companies. However the Adani Group denied the allegations, saying the short-seller’s narrative of stock manipulation had “no basis” and it stemmed from an ignorance of law. It has always made the necessary regulatory disclosures, the release added.
Due to the Hindenburg impact, the Adani group has already suffered a stock loss of Rs 8.8 lakh crore. Its stocks were down up to 60 per cent from their respective 52-week highs, wiping out more than $100 billion dollars from their cumulative market capitalization.
