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NEW DELHI, Feb 1 (Reuters) – Gautam Adani’s flagship company on Wednesday called off its $2.5 billion share sale in a dramatic reversal as the rout sparked by criticism from a U.S. short seller erased billions more of the value of the Indian tycoon’s shares.
The withdrawal of the Adani Enterprises (ADEL.NS) stock offering marks a stunning setback for Adani, the dropout-turned-billionaire whose fortunes have grown rapidly in recent years, in line with the value of his companies’ shares.
“Today’s market was unprecedented and our share price fluctuated throughout the day. Given these extraordinary circumstances, the Company’s Board of Directors felt that continuing the issuance would not be morally correct,” Adani said.
“Our balance sheet is very healthy with strong cash flow and secure assets, and we have an impeccable track record of servicing our debt. This decision will have no impact on our existing operations and future plans,” the billionaire added. in a statement to Indian. Trades.
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Adani, whose global business interests span ports, airports, mining, cement and electricity, is fighting to stabilize his businesses and defend his reputation.
“Once the market stabilizes, we will review our capital markets strategy,” he added.
A Hindenburg Research report last week alleged misuse by offshore tax havens and stock manipulation by the Adani Group. It also raised concerns about the high level of debt and valuations of seven listed Adani companies.
The January 24 report has since triggered an $86 billion erosion in the market capitalization of seven Adani Group listed companies.
Adani Group denied the allegations, saying the short seller’s share manipulation allegation had “no basis” and stemmed from ignorance of Indian law. The group has always made the necessary regulatory disclosures, he added.
Adani Group was working with its bankers to repay the proceeds received by on the secondary sale of shares of Adani Enterprises. Major investors who had backed the issue included Maybank Securities and Abu Dhabi Investment Authority.
The company aims to protect the interests of its investment community by returning the proceeds, she said.
The Adani Group had mustered enough investor support on Tuesday to keep selling shares going, in what some saw as a boost to investor confidence amid the storm.
But after a brief respite, selling of Adani Group stocks and bonds resumed on Wednesday, with shares of Adani Enterprises plunging 28% and Adani Ports and Special Economic Zone (APSE.NS) falling 19%, the worst day on record for both.
Fundraising was essential for Adani, not only because it would have helped reduce his group’s debt, but also because it was seen by some as a boost of confidence as he faced the greatest challenge. business and reputation of his career.
Wednesday’s stock losses saw Adani slip to 15th on the Forbes rich list with an estimated net worth of $75.1 billion, below rival Mukesh Ambani, the chairman of Reliance Industries (RELI.NS) who ranks ninth with a net worth of $83.7 billion.
The share sale was successful on Tuesday even when the Adani Enterprises share price in the Mumbai markets was trading below the offer price of the share sale.
“I don’t know how the markets will behave in the short term. But it’s a measure to improve (Adani’s) reputation since investors were looking at a 30% loss even before the shares were allocated,” he said. said Rajesh Baheti, managing director, Crossseas Capital Services, an algo trading firm.Reporting by Aditya Kalra and Jahnavi Nidumolu in Bengaluru; Editing by Anil D’Silva, Kirsten Donovan and Alexander Smith
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