May 22, 2024
Adani Enterprises FPO Cancelled: Blocked Money to be Returned Soon

Adani Enterprises FPO Cancelled: Blocked Money to be Returned Soon

Despite having their follow-on public offering (FPO) fully subscribed, Adani Enterprises decided not to proceed with it for investor protection!

Announcing this move on late Wednesday, the company said it’ll return all the funds pledged for this FPO and thanked all those who have participated in the offering. Gautam Adani, the chairman of Adani Group, said they’d rework their capital strategy once the market stabilizes.

Adani Enterprises Calls Off FPO

In an unprecedented move, Adani Enterprises called off its much-debated FPO on Wednesday. While it’s still unknown whether it’s possible under the market rules, the group issued a statement detailing this move.

Based on the stock market data, the Adani Enterprises FPO is worth Rs.20,000 crores in the form of 4,55,06,791 fresh shares – where it attracted 5,08,68,352 bids! That’s an over-subscription of 112%, fuelled mostly by Non-institutional investors (NIIs) and Qualified Institutional Buyers (QIBs).

NIIs had subscribed to the Adani Enterprises FPO over three times the 96.16 lakh shares reserved, whereas QIBs almost completed their reserved quota of around 1.28 crore shares. Well, the FPO has seen a weak demand in employee and general quota, where they made 55% and 12% bids, respectively. This is despite additional discounts and Adani’s promises to expand his shareholder base.

Though the Adani Enterprises FPO had been totally subscribed somehow, it took a great hit on the stock market today – with its share price falling around 30% – just a day after the subscription! And now, unexpectedly, Adani Enterprises has called off the FPO, citing extreme market volatility.

In a press release issued late Wednesday, Adani Enterprises said;

“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 withdrawing the completed transaction.”

Further, the group’s Chairman, Gautam Adani, said, “the board felt that going ahead with the issue will not be morally correct” amidst the extraordinary circumstances of the market. Thus, in order to protect their investors “from any potential financial losses, the Board has decided not to go ahead with the FPO.”

Lastly, he thanked all the investors who pledged their funds to the FPO and said they’re working on releasing back the blocked amounts in bank accounts to investors. Assuring that their “balance sheet is very healthy with strong cashflows and secure assets,” Adani said they’ll review their capital market strategy once the market stabilizes.

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