Shares of Adani Enterprises Ltd has seen further sell off in today's trading session, where the stock is down over 20%.
In the early trade today, the stock slumped over 12% following company's decision to call off its follow on public offering (FPO) plans. However, the stock was seen recovering. At 14:35 IST, the stock is trading 22.48% lower.
On Wednesday, the company in an exchange filing said that due to unusual circumstances and the current market volatility, it wants to safeguard the interest of its investors base by returning the FPO funds and cancelling the complete transaction.
Shares of Adani Enterprises closed 28.20% lower on Wednesday after gaining around 2.80% on Tuesday's session.
The stock price on Wednesday closed at ₹2,135.35, down nearly over 31 percent than the lower limit, and over 34 percent than the upper limit of the price band set for the FPO.
The FPO price band was set at ₹3,112 to ₹3,276 per equity share for the proposed offer.
“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,” said Gautam Adani, Chairman, Adani Enterprises Ltd in an exchange filing on Wednesday.
On the final day of subscription, the company's FPO was oversubscribed 1.12 times amidst Hindenburg allegations. The public subscription was driven by strong response from non institutional investors (NIIs) and qualified institutional buyers (QIBs). Retail investors, however, stayed away from the FPO subscription because of the significant price difference in stock price and the FPO price band.
The public issue opened for subscription on Friday, January 27, and closed on Tuesday, January 31.
Further, the company said that its working with the book running lead managers (BRLMs) of the public offer to refund the proceeds received and will release the amounts blocked in the bank accounts of investors for subscription to this issue.
Axis Capital Ltd, ICICI Securities Ltd, Jefferies India Pvt Ltd, SBI Capital Markets Ltd, BOB Capital Markets Ltd, IDBI Capital Markets & Securities Ltd, JM Financial Ltd, IIFL Securities Ltd, Monarch Networth Capital Ltd and Elara Capital (I) Pvt Ltd are the book-running lead managers of the FPO.
The company had plans to to raise ₹20,000 crore through its FPO, and wanted to utilise the net proceeds to pay debts (in full or in part) and cover some of the company's subsidiaries' capital expenditure needs.
However, following Hindenburg Research allegation on the Indian giant for participating in a decades-long plan to manipulate stock prices and commit accounting fraud, the shares of Adani Group of companies since Wednesday, January 25 have fallen sharply and lost huge market cap.
