NEW DELHI, Feb 1 (Reuters) – Gautam Adani’s flagship company called off its $2.5 billion share sale in a dramatic reversal on Wednesday as a disruption caused by criticism from a U.S. short-seller wiped billions more from its value of the shares of the Indian tycoon deleted.
The withdrawal of the Adani Enterprises ( ADEL.NS ) share offer marks a stunning setback for Adani, the school dropout turned billionaire whose fortunes have risen rapidly in recent years in line with the share values of his companies.
“Today the market has been unusual, and our share price has fluctuated during the day. Given these extraordinary circumstances, the board of the Company felt that continuing with the issue will not be morally correct,” said Adani.
“Our balance sheet is very healthy with strong cash flows and safe assets, and we have an impeccable track record of servicing our debt. This decision will not affect our existing operations and future plans,” the billionaire added in a statement to Indian exchanges. .
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Adani, whose global business interests span ports, airports, mining, cement and power, strive to stabilize its businesses and defend its reputation.
“When the market stabilizes, we will review our capital market strategy,” he added.
A report by Hindenburg Research last week alleged misuse by the offshore tax havens and stock manipulation by the Adani Group. It also raised concerns about high debt and the valuations of seven listed Adani companies.
The January 24 report has since revealed an erosion of $86 billion in the market capitalization of seven listed Adani Group companies.
Adani Group has denied the allegations, saying the short seller’s allegation of stock manipulation has “no basis” and stems from an ignorance of Indian law. The group has always made the necessary regulatory disclosures, he added.
Adani Group worked with its bankers to return the proceeds received through the secondary share sale of Adani Enterprises. Anchor investors that had backed the issue included Maybank Securities and Abu Dhabi Investment Authority.
The company intends to protect the interests of its investing community by returning the proceeds, it said.
Adani Group had gathered enough investor support on Tuesday to continue the share sale, in what some saw as a stamp of investor confidence amid the storm.
But after a brief lull, the sell-off in Adani Group shares and bonds resumed on Wednesday, with shares in Adani Enterprises plunging 28% and Adani Ports and Special Economic Zone ( APSE.NS ) down 19%, the worst of the day on record for both.
The fundraising was critical for Adani, not only because it would have helped reduce his group’s debt, but also because it was seen by some as a measure of confidence, as he was the biggest business and reputational challenge of his career.
Wednesday’s stock losses saw Adani drop to 15th place on the Forbes rich list with an estimated net worth of $75.1 billion, below rival Mukesh Ambani, the chairman of Reliance Industries ( RELI.NS ) who ranks ninth with a net worth of $83.7 billion.
The share sale was successful on Tuesday even as Adani Enterprises’ share price in Mumbai markets was trading below the offer price of the share sale.
“I don’t know how the markets will behave in the short term. But this is a measure to improve (Adani’s) reputation as the investors were staring at a 30% loss even before the shares were allotted,” said Rajesh Baheti, Chief Executive Officer. Crossseas Capital Services, an algo trading company.
Reporting by Aditya Kalra and Jahnavi Nidumolu in Bengaluru; Editing by Anil D’Silva, Kirsten Donovan and Alexander Smith
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