What Is The Way Forward For Adani Enterprises To Raise Funds After Withdrawal Of FPO

Adani Enterprises on Wednesday night called off its fully subscribed Rs 20,000 crore follow-on public offer (FPO) citing volatility in the market. 

In a statement, Gautam Adani, Chairman of Adani Enterprises, said, “The Board takes this opportunity to thank all the investors for your support and commitment to our FPO. The subscription for the FPO closed successfully yesterday. Despite the volatility in the stock over the last week, your faith and belief in the Company, its business and its management has been extremely reassuring and humbling," said Gautam Adani, Chairman, Adani Enterprises.

Following Adani's withdrawal of FPO, the Reserve Bank of India (RBI) has sought details about lenders' exposures to the Adani Group.

On Wednesday, Swiss lender Credit Suisse stopped accepting bonds by Adani group companies as collaterals for margin lending.

The going has been tough for the diversified conglomerate over the past week ever since US-based short seller Hindenburg Research levelled a slew of allegations about the group's operations, calling it the biggest corporate con ever. The Ahmedabad-headquartered group has denied all the allegations but failed to convince analysts and investors.

Amid all the doom and gloom around Adani Group it will be tough for the ports-to-power conglomerate to raise money from the markets for expansion plans at a time when its facing allegations of being an over-leveraged group amid selloff in the stock.

On Thursday Adani Enterprises share closed 26.5 per cent lower at Rs 1,564 a day after it dropped as much as 35 per cent. Since the Hindenburg report came out Adani Enterprises shares have crashed 55 per cent.

After cancelling FPO the company is likely to put all the growth plans on the back burner for next three to six months and fund raising would be out of question, say analysts.

“Raising money from debt is out of question as one of the purpose of FPO was to pare off debt apart from expansion plans in green hydrogen plants and other businesses. They will not be ready to enter markets any time soon to raise money because after a massive selloff nobody will have strength raise funds,” says market expert Avinnash Gorakksakar.

(With agency inputs)