MUMBAI: In a stunning move, Adani Enterprises Ltd (AEL) late on Wednesday decided to withdraw its Rs 20,000 crore follow-on public offering (FPO), India’s biggest such issue, amid a meltdown in its stock that has soured investor sentiment. The move comes just after AEL’s FPO witnessed full subscription on Tuesday, supported by high networth individuals and institutional investors, who more than made up for the poor response from retail investors.
Gautam Adani, chairman, AEL, said, “Today, the market has been unprecedented, and our stock price has fluctua-ted over the course of the day. Given these extraordinary circumstances, the board felt that going ahead with the issue would not be morally correct. The interest of the investors is paramount andhence to insulate them from any potential financial losses, the board has decided not to go ahead with the FPO. ”
Gautam Adani, chairman, AEL, said, “Today, the market has been unprecedented, and our stock price has fluctua-ted over the course of the day. Given these extraordinary circumstances, the board felt that going ahead with the issue would not be morally correct. The interest of the investors is paramount andhence to insulate them from any potential financial losses, the board has decided not to go ahead with the FPO. ”
Top officials in AEL said that it would have been unfair to its supporters (read FPO investors) to be burdened with its offer price amid a 28. 4% plunge on Wednesday and a cumulative 38. 2% fall over the last five sessions.
AEL’s stock closed at Rs 2,129 on the BSE on Wednesday, much lower than the FPO price of Rs 3,112-Rs 3,276, with investors bidding at the upper end of the price band. The group’s listed companies have collectively lost about 38. 7% in the last five trading sessions.
Since the FPO consisted of partly paid shares, investors paid only 50% of the offer price (Rs 1,638 per share) upfront, with the remaining to be paid at a later date. Since 2016, only two other companies have withdrawn IPOs or FPOs.