India’s Adani Enterprises has canceled a $2.5 billion stake sale in a dramatic reversal, the company said Wednesday.
The withdrawal represents a stunning setback for school dropout turned billionaire Gautam Adani.
“…today the market is unprecedented and our stock price has fluctuated throughout the day. I felt that.
“The interests of our investors are paramount, and in order to protect them from potential financial loss, the Board has decided not to proceed with the FPO. [follow-on public offer]’ added the billionaire.
“Our balance sheet is very strong, with strong cash flow, safe assets and an impeccable track record of debt service. This decision will impact our existing business and future plans. not.”
With business interests spanning ports, airports, mining, cement and power, Adani fights to stabilize his company and protect its reputation.
“Once markets stabilize, we will review our capital markets strategy,” he said.
Shares of the billionaire conglomerate have plummeted since US-based short-selling firm Hindenburg Research raised debt and accounting concerns last week, with Adani’s valuation dropping $86 billion. The tycoon also lost his crown as Asia’s richest man.
Adani Group denied the allegations, saying the short seller’s allegations of stock manipulation were “unfounded” and stemmed from ignorance of Indian law. .
“The news that the stock sale has been canceled is troubling because the pain that has struck Adani’s company has been devastating. Senior Market Analyst at Broker OANDA.
“Going through with this stock sale and then canceling it raises even more questions.”
Reuters reported on Wednesday, citing a direct source, that India’s market regulator was investigating the Adani Group stock crash, uncovering several allegations by Hindenberg Research and a potential stake sale by Adani Enterprises. It said it was investigating allegations of misconduct. .
Hindenburg has revealed that it has short positions in Adani companies through bonds traded in the United States and derivative products traded outside India.
Yields on dollar-denominated bonds issued by Adani rose Wednesday after a stock sale was reversed. Bond yields move inversely with prices. The yield on Adani Green Energy’s $500 million bond due 2024 rose to 15.45% on Wednesday from 12.1%.
important fundraising
The funding was important to Adani not only because it would help reduce the group’s debt, but also because it was seen as a measure of confidence when facing the biggest business and reputational challenges of his career. .
The Adani Group was working with bankers to try to refund the proceeds received from the secondary sale of Adani Enterprises shares. Anchor investors backing the issue included Maybank Securities and Abu Dhabi Investment Authority.
By returning profits, the company aims to protect the interests of the investment community, the company said.
On Tuesday, the Adani Group rallied support from investors for the sale of its stake in Adani Enterprises. This was seen as a sign of investor confidence in times of crisis.
But Adani Group stock and bond selling resumed on Wednesday, with shares of Adani Enterprises plunged 28% and Adani Port and Special Economic Zones down 19%, the worst day ever for both.
Wednesday’s drop in stocks dropped Adani to 15th place on Forbes’ list of richest people with an estimated net worth of $75.1 billion, trailing rival Mukesh Ambani, chairman of Reliance Industries, who ranked ninth with a net worth of $83.7 billion.
“I don’t know how the market will behave in the short term. But this is a step to strengthen [Adani’s] Even before the shares were allotted, investors were seeing losses of 30%, so it wasn’t popular,” said Rajesh Baheti, chief executive of algorithmic trading firm Crosseas Capital Services. increase.
