Adani Enterprises cancels $2.4 billion share sale

Adani Enterprises cancels $2.4 billion share sale
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Adani Enterprises has halted its $2.4 billion fundraising in a final blow to Indian billionaire Gautam Adani, who saw shares in its industrial empire plummet after a short-selling seller made allegations of fraud and stock manipulation.

The decision to withdraw the share sale and reimburse investors marks a sudden turn after shares of Adani Enterprises fell 27 percent Wednesday, well below the deal price range.

Sales at Adani’s public companies have wiped out more than $90 billion in value since Hindenburg Research last month claimed that the company’s parent company, Adani Group, whose businesses spanned from ports to data centers, used it to inflate offshore entities in tax havens. The share prices of listed companies allow them to borrow more money and “put the whole group in an unstable financial situation”.

In a regulatory filing filed Wednesday evening, Adani “…continues and withdraws the completed transaction”, “given the unprecedented situation and current market volatility”.

The Ahmedabad-based group added that it is working with its bankers to issue repayments. “With strong cash flows and secure assets, our balance sheet is very healthy and we have an impeccable track record of paying our debts. This decision will have no impact on our current operations and future plans,” it said.

line chart of Rs per share showing Adani Enterprises shares falling

Adani’s efforts to allay investors’ concerns, including a 413-page response refuting the US short seller’s claims, have failed to stop the stock price declines.

He tried to enlist some of India’s leading magnates to help salvage the stock sale, according to people familiar with fundraising. Organizations affiliated with Sajjan Jindal, billionaire chairman of JSW, and Sunil Bharti Mittal, chairman of Bharti Enterprises, have agreed to invest in Adani Enterprises’ stock offering.

Those involved in the fundraiser said it was fully supported by investors, including Abu Dhabi’s International Holding Company and London-traded Jupiter Asset Management. On Monday, IHC, a conglomerate spanning the health, energy and food industries, said it will commit $400 million to the sale of shares. Adani said on Tuesday that she received offers for more than 92 percent of the shares and found the sale of shares successful.

But Adani on Wednesday said in the regulatory filing that the board “does not think it is morally right to continue with the issue” given the “extraordinary” fluctuations in the share price.

According to a person familiar with the terms of the deal, Adani will effectively bring back the roughly $1.25 billion that backers have transferred so far. “He needs to keep a clean track record,” the person said, to explain the billionaire’s decision.

Adani Enterprises closed Wednesday at Rs 2,179.75 per share, compared to Rs 3,112, which is the lower end of the price range the company has set for the sale of shares.

India’s financial regulator is examining the collapse in Adani shares and possible improprieties in the sale of shares since the short-seller allegations, Reuters reported earlier on Wednesday. The Securities and Exchange Board of India declined to comment. The Adani Group did not respond to a request for comment on the report.

Additional reporting by Anjli Raval from London and Ortenca Aliaj from New York

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