Adani Enterprises, one of India’s largest conglomerates, hit with a major setback and it announced the cancellation of its Follow-On Public Offering (FPO) and decided to return money to its investors. The decision was made amid ongoing controversy following the publication of a report by American short-seller Hindenburg Research, which accused the company of using tax havens to evade taxes and raised concerns about its debt levels.
The Hindenburg report claimed that Adani was using “complex and controversial tax structures” in tax havens such as Dubai and Singapore to minimise its tax liabilities. The report also claimed that the company faced significant debt issues, which could risk its future growth and stability.
In response to the report, Adani issued a statement denying the claims made by Hindenburg Research and defending its use of tax havens as a common practice in international business. However, the report’s controversy quickly spread, putting pressure on the company to address the allegations and concerns raised.
The FPO of Adani enterprises opened at ₹3,112 – 3,276 per FPO equity share. However, due to Hindenburg reports fact revelations, it gets closed on the last day at Rs.2761.45 per share, which is 11.26% lower than the FPO issue price, which means the investors could get the shares of Adani enterprise at a lower price in the market as compared to the FPO.
In the face of growing pressure, Adani announced on February 1 that it was cancelling its FPO and would return the money to its investors. The company stated that it is working with its Book Running Lead Managers (BRLMs) to refund the proceeds it received in escrow and release the amounts blocked into investors’ bank accounts for subscription to this issue.
The cancellation of the FPO and the return of funds have raised questions about the future of Adani and its ability to continue growing and expanding. Many analysts believe that the Hindenburg report’s controversy will continue to impact the company’s reputation and financial performance in the coming months.
However, not all is lost for Adani. The company has a long history of resilience and has overcome numerous challenges in the past. Furthermore, it has a strong portfolio of businesses and assets that are expected to continue performing well in the future.
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