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Adani abruptly abandons US$2.4 bil stock sale as crisis mounts

Bloomberg2/2/2023 03:31 PM GMT+08  • 2 min read
Adani abruptly abandons US$2.4 bil stock sale as crisis mounts
Adani Enterprises was offering shares to investors at 3,112 rupees to 3,276 rupees apiece in the offering. Photo: Bloomberg
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The flagship company of beleaguered Indian tycoon Gautam Adani pulled a record 200 billion-rupee (US$2.4 billion or $3.19 billion) share sale after a selloff triggered by a US short seller’s report engulfed his group in turmoil.

Adani Enterprises Ltd. decided not to go ahead with its follow-on public offer of shares, according to a statement late on Wednesday. India’s Mint newspaper reported earlier that Adani was considering withdrawing the share sale, even though it was fully subscribed with backing from prominent Indian and Gulf investors.

The decision came after a renewed slump in price for the company and sister firms. The plunge accelerated after Bloomberg News reported Credit Suisse Group AG has stopped accepting bonds of Adani’s group of companies as collateral for margin loans to its private banking clients.

“It’s unusual for a secondary offering like this to be cancelled,” said Ben Silverman, director of research at VerityData. “Pulling an offering at the last minute doesn’t inspire a lot of confidence right now.”

Adani Enterprises was offering shares to investors at 3,112 rupees to 3,276 rupees apiece in the offering. The company’s stock closed Wednesday at 2,135.35 rupees, or 31% below the bottom of the price range, meaning any investor in the share sale would be sitting on immediate losses.

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The flagship firm said in the statement it’s pulling the deal to insulate investors in the offering from potential losses.

“Today the market has been unprecedented, and our stock price has fluctuated over the course of the day,” it said in the statement. “Given these extraordinary circumstances, the company’s board felt that going ahead with the issue will not be morally correct.”

Adani Enterprises had secured full subscription for India’s largest follow-on share sale on Tuesday, the final day for bids, amid a last-minute surge in interest by existing shareholders and institutional investors. The expected completion of the deal was seen as a victory for Adani after Hindenburg Research’s fraud allegations cast a shadow over the offering.

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The company said it’s working with book-running lead managers to refund the proceeds received in escrow and to also release the amounts blocked in bank accounts for subscription to this issue.

India’s SGX Nifty 50 Index futures extended decline to 0.8% after Adani’s decision. The gauge was flat ahead of the announcement.

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