Adani Group stock prices kept plummeting, with the company's flagship Adani Enterprises (AEL) falling 26.5 per cent to £156.5 million on the BSE, or over half of its now-retracted follow-on public offer (FPO) price of £311.2 million.
Along with AEL, three more group stocks - Adani Total Gas, Adani Transmission and Adani Green Energy - closed at the 10% lower circuit limit while another three -Adani Wilmar, NDTV and Adani Power -closed at the 5% lower circuit. The stock price of Adani Ports & SEZ closed 6. 1%.
AEL, Adani Transmission, Adani Green Energy and Adani Ports all saw their stocks drop to 52-week lows. After US-based short seller Hindenburg Research published a report accusing the group of corporate fraud and market manipulation, the sell-off in the group's equities began on January 25.
Just last week, Adani stood fourth on the world’s billionaire list with a wealth of $119 billion. Now, he is the 11th richest person in the world.
FPO cancelled
AEL made the decision to cancel its £2 billion follow-on public offering (FPO), the largest of its kind in India, as a result of a stock market collapse that damaged investor confidence. The action was taken shortly after AEL's FPO saw full subscription, supported by institutional and high-net-worth investors, who more than made up for the weak response from retail investors.
Gautam Adani, chairman, AEL, said, “Today, the market has been unprecedented, and our stock price has fluctuated over the course of the day. Given these extraordinary circumstances, the board felt that going ahead with the issue would not be morally correct. 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. ”
Jo Johnson quits
Lord Jo Johnson, younger brother of former British Prime Minister Boris Johnson, has resigned his non-executive directorship of a UK-based investment firm linked with the now-withdrawn FPO of Adani Enterprises.
FPO scrapping won’t impact economy: TM
Union finance minister Nirmala Sitharaman said that the cancellation of Adani Enterprises’ FPO will not have any impact on Indian economy and no effect on the image of the economy.
Responding to queries on the crash of Adani Group shares, the finance minister said, “Regulators will do their job, and they are independent of the government. It is up to them to do what is appropriate. To keep the market regulated and in prime condition is the role of Sebi, and it has done that. ”
Sitharaman said RBI had already issued its statement on the Adani issue, and public sector banks and LIC had issued statements on their exposure to the group.
A rout in the share price of Adani group companies had culminated in the group’s flagship company Adani Enterprises’ FPO being cancelled. The FM said in an interview that no matter how much the issue is discussed globally, it is not an indication of how well the financial markets are governed.
Shelves bond plan
Adani Enterprises has shelved a plan to raise £100 million through its first-ever public sale of bonds, reports said citing people familiar with the matter. The move comes days after it withdrew its FPO amid a crash in share prices.
S&P cuts outlook on Adani Ports
In the first rating action since the Hindenburg report, S&P has lowered the outlook on Adani Ports and Adani Electricity to negative from stable. The ratings agency cited the deterioration in the credit profile of Adani Ports and Adani Electricity Mumbai due to governance risks and funding challenges for the larger Adani Group.
Earlier ICRA, an arm of Moody’s, said that it is monitoring the impact of these developments on its rated portfolio in Adani Group. The monitoring was especially for the financial flexibility of the group, its access to domestic & international capital markets and banking channels, pricing of debt, tightening of debt covenants, recall or acceleration of debt facilities and refinancing. According to ICRA, the companies it rates do not have any immediate refinancing requirements.
Another rating agency Fitch said that there was no immediate impact on the Adani companies that it rates from the shortseller report. A rating downgrade is a cause of worry for investors as it increases the returns demanded by debtors.