Adani Enterprises (AEL) on Wednesday called off its Rs 20,000-crore follow-on public offering (FPO). AEL said it would return the FPO proceeds and withdraw the completed transaction, given the unprecedented situation and the current market volatility. 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.
The decision was taken by the board of directors of the company, at a meeting held on Wednesday, in the interest of shareholders. The issue had managed to scrape through on Tuesday with help from foreign portfolio investors (FPIs) and subscriptions from wealthy investors, including family offices.
Family offices of prominent Indian business families, including those of Mukesh Ambani, Sajjan Jindal and Sunil Mittal are said to have invested in the FPO’s main book on the final day.Shares of the Adani group shares faced another rough day on Wednesday, with the flagship Adani Enterprises crashing 26.7% to Rs 2,179 on the bourses. The AEL FPO had garnered bids for about 50.8 million shares against the offer size of 45.5 million shares on the final day, with an overall subscription of 1.12%. This was despite the AEL shares trading in the secondary market below the lower end of the follow-on offer price of Rs 3,112.Gautam Adani, chairman, Adani Enterprises, said: The Board takes this opportunity to thank all the investors for their support and commitment to the 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.”However, he added, that given the extraordinary circumstances, the company’s board felt that going ahead with the issue would 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 said.
AEL said it was working with its book running lead managers to refund the proceeds received in the escrow account and release the amounts blocked in bank accounts for subscription to the issue.Adani reiterated that AEL’s balance sheet is very healthy with strong cashflows and secure assets, and the company has an impeccable track record of servicing its debt. “This decision will not have any impact on our existing operations and future plans. We will continue to focus on long term value creation and growth will be managed by internal accruals. Once the market stabilizes, we will review our capital market strategy,” the AEL chairman said.
A host of foreign investors including the likes of Abu Dhabi Investment Authority, Maybank Asia, Goldman Sachs, Nomura, Societe Generale, Jupiter, BNP Paribas, Al Mehwar, Citigroup and Morgan Stanley had participated in the issue’s anchor book. Domestic investors such as SBI Employee Pension Fund, HDFC Life, Life Insurance Corporation of India and SBI Life were also a part of the anchor book. No domestic mutual fund participated in the offering.