'Interest of the investors paramount,' says Gautam Adani as group calls off Rs 20,000-crore FPO: Read full text

Gautam Adani, Chairman of Adani Group.

Gautam Adani, chairman and founder of Adani Group, on February 1 told investors that following the unprecedented fluctuations in the conglomerate's stock prices, the interest of the investors is "paramount" and therefore his flagship company Adani Enterprises will not go ahead with its Rs 20,000 crore Follow-On Public Offering (FPO), a day after it got fully subscribed.

The company, which is battling allegations of "stock market manipulation" and "accounting fraud" levelled by US-based short-seller Hindenburg Research, said it would return the money to those who invested in the FPO.

"...Today the market has been unprecedented, and our stock price has fluctuated over the course of the day. Given these extraordinary circumstances, the Company’s board felt that going ahead with the issue will 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," Adani said in a note.

The development comes after most of Adani stocks continued to fall on February 1 after global brokerage firm Credit Suisse said it will stop accepting bonds of the company as collateral for margin loans to its private banking clients.

All Adani group firms ended 2-28 percent lower, eroding around Rs 1.85 lakh crore in market cap, at the close of the market hour on February 1. Since last week, the group lost around Rs 7.44 lakh crore in market value.

Here's the full text of Gautam Adani's message to investors

“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. Thank you.

However, today the market has been unprecedented, and our stock price has fluctuated over the course of the day. Given these extraordinary circumstances, the Company’s board felt that going ahead with the issue will 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.

We are working with our Book Running Lead Managers (BRLMs) to refund the proceeds received by us in escrow and to also release the amounts blocked in your bank accounts for subscription to this issue.

Our balance sheet is very healthy with strong cashflows and secure assets, and we have an impeccable track record of servicing our debt. This decision will not have any impact on our existing operations and future plans. We will continue to focus on long term value creation and growth will be managed by internal accruals. Once the market stabilizes, we will review our capital market strategy. We are very confident that we will continue to get your support. Thank you for your trust in us.”