Adani Enterprises announces $2.4bn sale of shares

Indian group cites ‘unprecedented’ market volatility as the reason for its decision

Adani Enterprises has canceled its $2.4bn equity crowdfunding in the latest blow to Gautam Adani who saw shares fall after a short seller made claims of stock manipulation and fraud.

After Adani Enterprises’ share dropped 27 percent on Wednesday, the decision to rescind the sale and refund investors is a sudden turn. They were well below the deal price.

Since Hindenburg Research last month alleged that Adani Group’s parent, Adani Group, which has businesses that span ports and data centres, inflated the share prices of listed companies in tax havens, the sale of Adani’s listed firms has wiped out more than $90bn of the group’s value. This was to allow them to take on more debt, “putting the whole group on a precarious financial basis”.

Adani stated in a regulatory filing Wednesday night that, “given the unprecedented market situation and current market volatility”, it was “returning to the. . . Proceeds and withdraws the transaction completed.”

Ahmedabad-based company said it was in talks with its bankers to issue refunds. “Our balance sheet has strong cash flows, secure assets and a healthy balance. We have a proven track record in servicing our debt. It stated that the decision would not affect our future operations or plans.

Adani’s attempts to calm investors’ fears, including a 413-page response to the allegations of the US short seller, have not helped to stop the stock price declines.

According to sources familiar with the fundraising, it sought to recruit some of India’s most powerful tycoons in order to save the share sale. Two of the people who spoke out said that entities connected to Sunil Bharti Mittal (chair of Bharti Enterprises) and Sajjan Jindal (billionaire chairman of JSW), had agreed to invest into Adani Enterprises’ share sale.

According to people involved in the fundraising, investors such as Abu Dhabi’s International Holding Company (Lond) and London-listed Jupiter Asset Management fully supported it. IHC, an IHC conglomerate that includes businesses in healthcare, energy, and food, announced Monday it would contribute $400mn to the sale. Adani claimed that it had received bids for more then 92 percent of the shares and declared the sale a success.

Adani stated Wednesday that the board felt that the continuation of the issue was not morally right, citing “extraordinary” fluctuations to its share price.

According to someone familiar with the terms, Adani will return $1.25bn of cash that was transferred by backers. The person who spoke on behalf of Adani said that Adani must maintain a clean record to justify his decision.

Adani Enterprises closed Wednesday at Rs2,179.75 per share, compared with Rs3,112, which was the lowest price the company had chosen for its share sale.

On Wednesday, a number of Adani Group Dollar bonds fell sharply in value. Adani Ports senior unsecured notes, due to mature in July 2024 fell more than a fifth and traded below 70 cents per dollar, a level widely regarded as a sign of distress.

After falling 14%, Adani Ports bonds due to mature in July 2027 traded at just 70 cents per dollar. The price of notes due to mature in 2032 fell below 60 cents.

Reuters reported Wednesday that India’s financial regulator is currently looking into the Adani share crash since short seller allegations were made and any irregularities in the sale. The Securities and Exchange Board of India did not respond to a request for comment. The Adani Group didn’t respond to a request to comment on the report.

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