India's Adani Calls Off $2.5B Share Sale — Bill Ackman Gets Suspicious About Offering

Indian conglomerate Adani Group’s flagship company Adani Enterprises has called off its $2.5 billion share sale, also known as a follow-on public offer, according to a statement issued by the firm to exchanges on Wednesday.

What Happened: The board decided not to go ahead with the share sale, which was fully subscribed. "Given the unprecedented situation and the current market volatility, the company aims to protect the interest of its investing community by returning the FPO proceeds and withdraws the completed transaction," the company said in a statement.

Billionaire Gautam Adani said the company’s board felt that going ahead with the issue would not be morally correct amid the current circumstances. "The interest of the investors is paramount and hence to insulate them from any potential financial losses, the Board has decided not to go ahead with the FPO. We are working with our Book Running Lead Managers to refund the proceeds received by us in escrow and to also release the amounts blocked in your bank accounts for subscription to this issue," he said.

See Also: Mukesh Ambani Is Once Again India's Richest Man As Gautam Adani's Companies Take Massive Beating At Share Market

Anchor investors who supported the issue included Maybank Securities and Abu Dhabi Investment Authority, Reuters reported.

Adani Group stocks were hit following a scathing report by Hindenburg Research last week that accused the conglomerate of improper use of offshore tax havens and stated it held short positions in the company via its U.S.-traded bonds and non-Indian-traded derivative instruments.

According to a Reuters report, the ensuing rout in the stocks wiped out about $86 billion of investors' wealth. The report, which cited a source with direct knowledge, also pointed out that India's market regulator is examining the incident.

"Our balance sheet is very healthy with strong cashflows and secure assets, and we have an impeccable track record of servicing our debt. This decision will not have any impact on our existing operations and future plans," Adani said.

Ackman’s Take: Billionaire investor Bill Ackman on Wednesday tweeted his stance on the Adani FPO, saying he would not find it surprising if the "offering was rigged with affiliated buyers in addition to some real institutional participants like ADIHC."

I would not find it surprising if the @AdaniOnline offering was rigged with affiliated buyers in addition to some real institutional participants like ADIHC. This would explain the low retail participation and today’s price decline.

— Bill Ackman (@BillAckman) February 1, 2023

Last week, Ackman lent his support to Hindenburg’s report by calling it "highly credible and extremely well researched."

Photo: Courtesy of Team Finland on flickr

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