Adani Enterprises Cancels $2.5 Billion Share Sale Amid Fraud Accusations

KATHMANDU: On Wednesday, a day after Adani Enterprises announced it secured full investor subscription to its $2.5 billion follow-on public offering, the embattled group reversed course, issuing a statement that it was calling off its stock offering and returning all proceeds to investors.

The shocking turnaround comes eight days after Hindenburg Research published its 100-page report on the Adani Group, accusing it of fraud.

“Given the unprecedented situation and the current market volatility the company aims to protect the interest of its investing community by returning the FPO [Follow-on Public Offering] proceeds and withdraws the completed transaction,” said Gautam Adani, the Adani Group’s chairman, in a written statement. “The Board takes this opportunity to thank all the investors for your support and commitment to our FPO.”

The fundraising effort, which Adani Enterprises first announced in November, was thrown into chaos on January 24 when Hindenburg Research published its 100-page report, which alleges a years-long conspiracy by the Adani Group to commit accounting fraud and enrich its principals through stock market manipulation. The Adani Group has denied Hindenburg’s report and threatened legal action against the U.S. investment firm

Abu Dhabi’s IHC investment firm salvaged the offering with a last-minute injection of $400 million, reportedly with a nudge over the phone by Gautam Adani himself. Two other Indian tycoons, paint mogul Sajjan Jindal and telecom billionaire Sunil Mittal, also subscribed to the follow-on offering in “a last-minute push” the Economic Times and the Financial Times reported, citing sources familiar with the matter. Other investors included Goldman Sachs and London-listed Jupiter Asset Management, according to the New York Times and the Financial Times.

Minutes before the Adani Group announced it had canceled its offering, Forbes reported that two companies with alleged ties to Adani – Elara Capital and Monarch Networth Capital – were underwriters for the transaction, raising questions about whether Adani Group principals had purchased shares in the offering. The Adani Group has not responded to Forbes’ request for comment. forbes