Adani Group calls off FPO, to return money to investors: What exactly has happened?

[Kool_SRG]

The FPO call-off comes as share prices of the Adani group saw an unprecedented crash in the wake of the Hindenburg Research report on the group.

Adani Enterprises has cancelled its Rs 20,000 crore follow-on public offer (FPO), the company said in a regulatory filing late on Wednesday (February 1) evening.

The company will refund proceeds it had received as part of its FPO which was bailed out largely by corporates and foreign investors on Tuesday.

The extraordinary development has come amid a massive market rout in Adani Group stocks following the release of the Hindenburg Research report that accused the group of “brazen stock manipulation and accounting fraud”.

An FPO, also known as secondary offering, is a process in which an existing company listed on stock exchanges issues new shares to the existing shareholders as well as new investors.

But wasn’t the FPO oversubscribed?

On Tuesday, corporates and foreign investors had bailed out Adani Enterprises Limited’s FPO amid volatility in the stock market.

Despite the AEL share’s market price quoting below the issue price, the FPO was subscribed 1.12 times on the last day of the issue following a strong response from qualified institutional buyers (QIBs), including foreign institutional investors (FIIs) and non-institutional investors (NIIs) such as family offices of big industrialists that manage their personal wealth and ultra-high networth individuals.

The QIB portion was subscribed 1.26 times and NIIs 3.32 times. Corporates bid for 1.66 crore shares worth Rs 5,438 crore and FIIs applied for 1.24 crore shares worth Rs 4,127 crore.

However, the retail investors’ portion was subscribed only 0.12 times (12 per cent) with investors bidding for only 27.45 lakh shares as against the quota of 2.29 crore shares. The employees’ quota also remained undersubscribed with only 55 per cent of the quota getting bids.

And what happened on Wednesday?

The meltdown in Adani Group stocks and bonds resumed on Wednesday, with shares in Adani Enterprises plunging 28% and Adani Ports and Special Economic Zone dropping 19%, the worst day on record for both, Reuters reported.

On Wednesday, share price of Adani Enterprises nosedived more than 34 per cent to hit a day’s low of Rs 1,942 against a previous close of Rs 2,975, just shy of its lower circuit of Rs 1,933.75. The stock eventually settled 28.45 per cent lower at Rs 2,128.70.

Around noon India time on Wednesday, Bloomberg reported that Credit Suisse Group AG has stopped accepting bonds of the Adani Group companies as collateral for margin loans to its private banking clients.

The Swiss lender’s private banking arm assigned a zero lending value for notes sold by Adani Ports and Special Economic Zone, Adani Green Energy and Adani Electricity Mumbai Ltd., Bloomberg reported, quoting unnamed sources.

The Credit Suisse action signalled that scrutiny of Adani’s finances was growing, Bloomberg said.

When a private bank cuts lending value to zero, clients typically have to top up with cash or another form of collateral and if they fail to do so, their securities can be liquidated, the Bloomberg report explained.

What has the Adani Group said?

A statement by the group said that given the unprecedented situation and the current market volatility, the company is withdrawing the completed FPO transaction.

Gautam Adani, Chairman, Adani Enterprises Ltd said, “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.“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.”

[Ryzen_renoir]

Foreign investors probably forced him to call it off. Since Adani is in the game for the long run , him fleecing anchor investors would have ruined his name 

The valuations will slowly settle down and adani may be margin called forcing him to pledge more shares 

Either adani reduces his share (from 75 own +10 in shell firms)   or his firms will face liquidity crisis for some time 

[Kool_SRG]

15 minutes ago, Ryzen_renoir said:

Foreign investors probably forced him to call it off. Since Adani is in the game for the long run , him fleecing anchor investors would have ruined his name 

The valuations will slowly settle down and adani may be margin called forcing him to pledge more shares 

Either adani reduces his share (from 75 own +10 in shell firms)   or his firms will face liquidity crisis for some time 

I doubt if the FPO was actually subscribed but just would have had option of having FPO subscribed by Corporate biggies at last moment just on face of it and see how the market reacts but rout continued and then move by Credit Suisse was death blow in second half of market and ADANIENT share tanked from 3000 to 1942 just today.. 

This rout possibly forced the FPO to be called off since who will buy at premium price when its available at much cheaper value in market. Tomorrow it could be under more pressure and add to it particularly SBI & LIC could also suffer a lot.

[chammakchandra]

Especially ppl in India think if an American firm does an analysis and reports its gods word! In reality it’s not.. they r working towards their own gain.. 

 

https://amp.cnn.com/cnn/2023/01/30/business/nightcap-adani-hindenburg-explained/index.html

[hyperbole]

34 minutes ago, Ryzen_renoir said:

Foreign investors probably forced him to call it off. Since Adani is in the game for the long run , him fleecing anchor investors would have ruined his name 

The valuations will slowly settle down and adani may be margin called forcing him to pledge more shares 

Either adani reduces his share (from 75 own +10 in shell firms)   or his firms will face liquidity crisis for some time 

No, it is too expensive to buy his own at the offered price when it is selling much lower in the open market

Offered price 3200 vs curent market price 2000

[Sanjiv]

Not in top 10 billionaires anymore. Got wiped out 36 billion in days.

Happens only in India, China, Russia…

[hyperbole]

5 minutes ago, chammakchandra said:

Especially ppl in India think if an American firm does an analysis and reports its gods word! In reality it’s not.. they r working towards their own gain.. 

 

https://amp.cnn.com/cnn/2023/01/30/business/nightcap-adani-hindenburg-explained/index.html

You don’t have yo be rocket scientist to understand the fraud adani is doing, basically pumping his own through cayman islands and Mauritius entities(his *****). 2 of those firms subscribed to the FPO, SEBI might have called out this for him to roll back

[chammakchandra]

1 minute ago, hyperbole said:

You don’t have yo be rocket scientist to understand the fraud adani is doing, basically pumping his own through cayman islands and Mauritius entities(his *****). 2 of those firms subscribed to the FPO, SEBI might have called out this for him to roll back

Tell me who doesn’t.. everyone does that and even u will do it if u are such high level

[Ryzen_renoir]

8 minutes ago, hyperbole said:

No, it is too expensive to buy his own at the offered price when it is selling much lower in the open market

Offered price 3200 vs curent market price 2000

Adani convinced a lot of big shots in UAE and other foreign firms to invest in the FPO long time ago , they didn't account that the value will fall so quickly 

 

[sreenidhee]

4 minutes ago, chammakchandra said:

Tell me who doesn’t.. everyone does that and even u will do it if u are such high level

yeah rapes also very common now a days and everyone should do it when they can 

[anna_gari_maata]

9 minutes ago, Sanjiv said:

Not in top 10 billionaires anymore. Got wiped out 36 billion in days.

Happens only in India, China, Russia…

Musk lost 120 billion lite lelo with those racist rant

[hyperbole]

8 minutes ago, chammakchandra said:

Tell me who doesn’t.. everyone does that and even u will do it if u are such high level

Lol on from what did he do to everyone does that.
 

He basically holds 75% stocks in all his companies which is mandated by SEBI(at minimum 25% stock should be free float), he then is buying 15% of the remaining 25% float through his fake entities with borrowed money, that means there is only 10% float(shares to buy in open market), shares prices is about supply demand, when you restrict the float the prices are going to sky rocket, which essentially he is doing and mortgaging his pumped  up/inflated stocks to borrow more money from institutions like SBI and LIC.

With that money he has basically control over you and me - electricity/power, prices of good(every import has come through the ports, airports etc) he sort of creating a monopoly with the help of the government.

[sreenidhee]

explained very well 

 

[chammakchandra]

59 minutes ago, sreenidhee said:

yeah rapes also very common now a days and everyone should do it when they can 

Hmmm that tells me ur way of thinking 

[Sanjiv]

4 hours ago, anna_gari_maata said:

Musk lost 120 billion lite lelo with those racist rant

I was referring to losses incurred from fraudulent deeds and activities