Following a market crash, Adani Enterprises Ltd. has shelved the plan to raise Rs 1,000 crore through its first-ever public bond sale, according to people familiar with the situation. This would have been the company’s first-ever bond sale to the general public.
The Adani Group has been accused of accounting fraud and stock manipulation, and as a result, the impact has continued. Shares of Adani Enterprises have dropped by around 23% and are currently trading at their lowest level since March 2022.
The public note issuance was planned by the Gautam Adani empire’s flagship company for January in collaboration with Edelweiss Financial Services Ltd, AK Capital, JM Financial, and Trust Capital; however, activity has since ceased, according to the report, which cited people familiar with the situation.
In a shocking turn of events, Adani Enterprises’ $2.5 billion follow-on public offering (FPO) was canceled after a Hindenburg Research report caused the company’s stock price to plummet sharply.
The Indian markets regulator is looking into the situation and is also examining the company’s share price decline, any anomalies in the sale of shares that were halted, and the potential for price manipulation.
The Adani Group is alleged to have engaged in stock manipulation and improper use of offshore tax havens, according to research released by Hindenburg Research.
Concerns regarding Adani’s seven publicly traded firms’ value and high debt levels were also voiced.
After all the allegations and difficulties Adani group faces, the firm decided to curb its’ Capital spending plans.
Adani Group is reportedly trying to reduce its capital investment plans in the wake of the publication of the Hindenburg study. Additionally, the $300 million in cash on hand will be used by the corporation during the following six months for capex and to meet payment deadlines.
Adani Enterprises decided to cancel its 20,000-crore follow-on public offer and return the funds it had already received from investors. The equities of the Adani Group’s publicly traded companies have experienced a sharp decline, resulting in a 9.11 lakh crore decline in the market capitalization of the entire group.
The Indian company run by billionaire Gautam Adani would employ alternative funding sources such as internal accruals, promoter equity capital, and private placements to finance projects. It will also broaden its time horizon for growth in some companies.
Following Adani Group’s cancellation of its $2.5 billion share offering, it was decided to scale back spending plans. In a video that was made public, Gautam Adani claimed that the choice was made with the interests of investors in mind.
“I have had the good fortune to have tremendous support from all stakeholders, especially the investor community, throughout my humbling nearly four-decade entrepreneurial journey. I must acknowledge that whatever little success I have had in life is a result of their confidence in me.”
“Everything else is secondary to the interests of my investors in my business. Therefore, we withdrew the FPO to protect the investors from possible losses.”
Adani Enterprises‘ follow-on public offering, the largest follow-on share sale in India, was completely subscribed to before it was canceled. The global conglomerate International Holding Company, located in Abu Dhabi, contributed $400 million to it.
The market value of Adani and its affiliated firms has dropped by more than $100 billion because of the publication of the Hindenburg report.
Nirmala Sitharaman, India’s finance minister, stated that Adani’s abrupt withdrawal of $2.5 billion FPO had no impact on India’s economic standing.
“None of our macroeconomic foundations or the perception of our economy have been impacted. Yes, follow-on public offers (FPOs) enter the market, and foreign institutional investors exit, “added Sitharaman.
The minister continued that every market experience “fluctuation” but the recent growth indicates that people’s perceptions of the nation and its underlying qualities are unaffected.
She continued by saying that the country’s independent financial regulators are looking into the accusations against the Adani Group and that the Securities and Exchange Board of India (SEBI), which monitors capital markets, can help keep the markets stable.
The Sebi is in charge of maintaining the markets’ regulations in top shape. Additionally, she added that it has the means to maintain that top state.
TotalEnergies (TOT), one of Adani’s largest international partners, announced that arrangements are being made for the appointment of a major accounting firm to carry out the “general audit” of the Adani group.
In a statement, the French company “supported” Adani’s announcement that one of the “big four” accounting firms will be hired to carry out a broad audit.
The multinational energy corporation asserted that its investments in Adani’s businesses are “in complete compliance” with Indian law and its own internal governance procedures.
It further stated that the investments were made carefully, to its “satisfaction,” and in accordance with “best practices.”
What was Adani’s plan for 1000 crores bonds?
Adani Enterprises Ltd. (AEL) intended to sell non-convertible debentures to the general public to fund up to Rs 1,000 crore for commercial operations.
Adani Enterprises wanted to raise capital by issuing debt instruments, either through a private placement or a public offering, in one or perhaps more tranches, subject to receiving the required regulatory or legislative clearances as well as the members’ assent. Infrastructure is provided by Adani Enterprises.
One of a company’s primary issues in its early stages is raising funds. Even if there are many options, including Business Angels, Bank Loans, Venture Capital, and Personal Investment, it is believed that buying money through the issuance of public debt instruments is the best option for a new company.
By issuing long-term contracts known as debentures, businesses can borrow money at a fixed rate of interest. The term “debenture holder” refers to the person who holds debentures, and the “debenture interest” refers to this ownership stake.
According to Adani Enterprises, the board of directors had approved the principle of financing $1 billion through NCD private placements. The company noted that it would need the shareholders’ consent before funding up to Rs 2,500 CR through QIP.
Additionally, it said that the payment will be made in multiple installments. It stated that the board has recommended gaining the shareholders’ consent to raise Rs 2,500 crore through the issue of convertible bonds, shares, and other instruments through qualified.
The Board of Directors gave its preliminary approval to the private issue of non-convertible debt instruments for a maximum sum of Rs 1,000 crore in one or more tranches.
After seller Hindenberg Research published the study accusing the firm of errors in its accounting and valuation, the Adani group is currently experiencing one of its biggest crises in recent memory.
edited and proofread by nikita sharma