By Sunil Garodia
First publised on 2023-02-02 10:05:10
Having left with no alternative after a 29% hammering of Adani Enterprises shares on Wednesday, just a day after the FPO closed, Gautam Adani withdrew the issue to claim high moral ground. The statement issued by the company said that to protect the interest of the investors and on moral grounds (as the shares had depreciated much below the issue price band), the company was withdrawing the issue and would return the amount to all investors (even as this is being written, the price of Adani Enterprises shares has gone down by another 26.71% to reach Rs 1565 per share on Thursday against the price band of Rs 3112-3276 in the FPO).
Actually, the FPO should have been cancelled after the Hindenburg report was made public. But that would have been admitting defeat even before the war. Hence, what Adani did was to let the issue go ahead and got it fully subscribed with help from big-ticket investors in India and abroad (a report in Forbes even says that Adani bought into his own FPO with the help of two firms Hindenburg has accused of being Adani's 'parking entities' to escape Indian regulations) which showed to the world that investors still had confidence in the group. Having proved that, the company has now taken the decision to withdraw the issue to live and fight another day. For, if it had taken the money of its investors at the inflated price now, even these investors would have steered clear of the group in future.
It is going to be long and hard road ahead for Adani now. With share prices going down by more than 50% in a matter of days and Gautam Adani's wealth having eroded substantially, the shares he has pledged with various institutions for taking loans will not be enough to cover the amount. If all lenders ask for more security or worse, ask him to repay the loans, the group will have a tough time. The next few days will show how Gautam Adani tackles the biggest crisis in his life.