Adani cancels $2.5 billion stock sale as regulatory concerns mount

On Wednesday, Gautam  announced that he was abandoning the sale of $2.5 billion in shares of his company.

It withdrew its bid for shares in Adani Enterprises, the flagship of Indian conglomerate Adani Group, after the stock fell nearly 30%.

Breaking his silence with the media,  said, “Today’s market was unprecedented and our stock price fluctuated throughout the day. In view of these extraordinary circumstances, the Board of Directors of the society felt that going ahead with the show would not be morally correct.”

In a Jan. 24 report, short seller Hindenburg Research alleged that “the Adani Group engaged in a brazen scheme of stock manipulation and accounting fraud.” The report went on to raise concerns about the debt and valuations of seven Adani companies.

The Adani Group denied the allegations, saying they had “no basis” and stemmed from ignorance of Indian law. The group has always made the necessary regulatory disclosures, he added.

Speculation is growing that the Securities and Exchange Board of India (SEBI) will conduct some sort of investigation into Adani’s activities.

“My understanding is that a cancellation would mean a mandatory SEBI investigation,” Pramit Chaudhuri, head of the Eurasia Group’s South Asia practice, told CNBC.

Chaudhuri, like many, said he was “surprised” to see Adani’s plans scrapped after hitting the $2.5 billion target.

The astonishing reversal covers a week in which Adani has made it his mission to ensure the success of his stock sale following immense pressure from his share price plunge.

has exploited wealthy individuals in India and has also branched out to the Middle East. International Holding Co., an Abu Dhabi-based conglomerate, contributed $400 million to the deal. It was widely seen as a vote of confidence.

Goldman’s trading desk was also involved in the deal, a source familiar with the matter told CNBC. Shares of  Enterprises ended higher on Tuesday after announcing the fully subscribed $2.5 billion offering.

Investors woke up to an ugly picture on Wednesday when shares of Adani Enterprise plunged, falling as much as 28% and prompting  to cancel its stock sale.

“We are working with our Book Running Lead Managers (BRLM) to refund the proceeds we have received in escrow and to also release amounts held in your bank accounts for subscription to this show,”  added.

The move also raises questions about where else  will seek financial support.

As CNBC reported,  has established relationships with a list of international banks and private equity investors. The tycoon, once the second richest person in the world, slipped to 13th position in the Bloomberg Billionaires Index as of February 1.