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Adani Enterprises FPO Withdrawn – Should Investors be Worried?

Written by - Rudri Rawell

February 2, 2023 6 minutes

In a surprise move and amid the Hindenburg report controversy, Gautam Adani, founder & chairman of Adani Enterprises announced the withdrawal of the company’s Rs.20,000 crore FPO. The company plans to refund investment proceeds to FPO investors, which got bailed out mostly by institutional and foreign investors on the final day of subscription.

Here’s why Adani is withdrawing the FPO and what’s at stake.

Adani’s surprise FPO withdrawal

The FPO withdrawal comes at a time when the markets are highly volatile. Alongside this, Adani Group stocks are seeing significant decline in price following the Hindenburg Research report. Hindenburg, a research and short-selling company published this report, in which it has accused Adani group of “brazen stock manipulation and accounting fraud”.

Adani has assured investors that the group will work with the FPO’s book running lead managers to process refunds to investors. The investment amount will be released in investors’ bank accounts.

Did you know

FPO or Follow on Public Offer is also known as secondary offering. It is a process through which a listed company can issue fresh shares to existing and new shareholders for raising additional capital and diversification of its equity base.

Why is Adani Enterprises FPO being withdrawn?

It is surprising that Adani Enterprises FPO is being withdrawn considering it was subscribed fully by corporates and foreign investors on the final day of the issue subscription.

Although the company’s share prices were below the issue price, the FPO was subscribed 1.12 times on the final day of the issue. This was largely subscribed by foreign institutional investors (FIIs) and non-institutional investors (NIIs) including family offices of industrialists and ultra-high networth individuals. The FPO’s QIB portion was subscribed 1.26 times and the portion allocated to NIIs was subscribed 3.32 times. 

It is important to note that FPO’s retail portion saw a lul response as it was subscribed only 0.12 times. Meaning only 27.45 lakh shares were subscribed against the allotted 2.29 crore shares. Even the employees’ quota was undersubscribed at 55%.

In a YouTube video, Adani clarified that he has taken this decision as he believes it is morally correct. This was unexpected by most investors as Adani had been confident about the Follow-on Public Offer’s success, especially considering the institutional boost it received. The backdrop provided for this announcement is that the markets have remained volatile and Adani group’s stock prices had lost up to 10% value by Feb 1. 

Will FPO withdrawal impact Adani group?

Adani Group’s top executive, Mr. Gautam Adani has assured investors and stakeholders that the company’s recent decision to withdraw its follow-on public offering (FPO) will not affect the operations or future plans of any group companies. Adani emphasized that the group will remain focused on delivering projects efficiently and effectively. 

Adani acknowledged the recent stock market volatility experienced by Adani group companies. He expressed gratitude for the continued trust and support of its investors in the company, its business, and its leadership.

Disrupting or deceiving?

Adani Group stocks and bonds have been seeing a meltdown ever since the publication of the Hindenburg report. Shares of Adani Enterprises plunged 28% and those of Adani Ports and Special Economic Zone dropped 19%. As Adani group stocks saw a free fall, so did Gautam Adani’s ranking among the world’s richest. From 3rd spot only a month ago, Adani is now struggling to stay on the 15th spot with a drop of $14 billion in his net worth. 

Mounting debt of Adani group

According to reports, Adani group’s debt has doubled to $30 bn in the last 4 years alone. The group’s high leverage levels were also highlighted in the Hindenburg report, which called it ‘extreme leverage’. 

5 Adani group companies have a total debt of Rs. 2.1 lakh crores, of which, 40% is from Indian banks. The 5 companies are Adani Green, Adani Ports, Adani Enterprises, Adani Power, and Adani Transmission. Adani enterprises is also said to have a Net Debt-to-Ebitda ratio of 10 times, which is highest among the group’s listed companies. 

However, bankers who’ve lent funds to the group have stated that the group’s debts are secured by cash flows and assets.

What should Adani shareholders do? Watch this detailed video to find out.

What did Gautam Adani say on Rs. 20,000 crore FPO withdrawal?

Here’s the full speech given by Gautam Adani on FPO withdrawal –

“The Board of Adani Enterprises Ltd., (AEL) decided not to go-ahead with the fully subscribed Follow-on Public Offer (FPO). 

Given the unprecedented situation and the current market volatility the Company aims to protect the interest of its investing community by returning the FPO proceeds and withdraws the completed transaction.

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.”


Investors who have invested in Adani group companies are seeing the after-effects of the Hindenburg report and the FPO withdrawal. While the Adani story unravels, it is best for investors to take caution while investing in stocks. The best approach is to study and conduct research about a company before investing.


  1. What is the issue with Adani?

Adani Enterprises Rs. 20,000 crore FPO has been called off amid turbulent market conditions and controversy surrounding Hindenburg report.

  1. Why did Adani shares fall?

Stocks of Adani group companies have seen a free fall since the Hindenburg report release. The report accuses Adani group companies of ‘stock manipulation and fraud’

  1. Is it good time to buy Adani Power share?

It is best for investors to buy stocks after conducting thorough research and focus on value investing instead of timing the market.

  1. Which stock is best for future in India?

New investors looking for value investment can consider established and stable companies that fall under the large-cap category. However, it is best to do a thorough research about any company before investing.

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