He said Thursday that the decision was taken to insulate investors from potential losses.
Meanwhile, American billionaire Bill Ackman has said he won't be surprised if the company's $2.25 billion follow-on public offering "was rigged."
"I would not find it surprising if the @AdaniOnline offering was rigged with affiliated buyers in addition to some real institutional participants like ADIHC." "This would explain the low retail participation and today's price decline," Ackman said in a tweet.
Meanwhile, a Forbes report says that two companies accused by Hindenburg Research of assisting the Adani Group in its alleged conspiracy of accounting fraud and stock market manipulation were underwriters in the FPO. This includes Elara Capital (India) Private Limited, a subsidiary of London-based investment firm Elara Capital, and Monarch Networth Capital, an Indian brokerage firm. They are part of the 10 underwriters disclosed by Adani Enterprises in its offer agreement for the sale.
Adani Enterprises' follow-on public offering, India's largest follow-on share sale, was fully subscribed. It included a $400 million investment from the Abu Dhabi-based diversified conglomerate International Holding Company. But in a statement late Wednesday, the company decided not to go ahead with its follow-on public offering of shares.
The decision came as the company and its sister firms' shares witnessed a slump on Wednesday. Profit-booking during the last hours of trading came on the back of a Bloomberg report that said Credit Suisse's private bank had stopped accepting bonds of Gautam Adani's group of companies as collateral for margin loans to its private banking clients.
Indian market regulator examines Adani's share route: report
Adani Enterprises plunged 28 percent Wednesday, bringing its losses since the Hindenburg report to more than $18 billion. Adani Ports and Special Economic Zone dropped 19 percent. Both stocks had their worst day ever.
This is being seen as a sign that Adani's finances are under growing scrutiny. A Reuters report says that India's market regulator, SEBI, is examining a recent crash in shares of Adani Group and looking into any possible irregularities in a share sale by its flagship company.
Credit Suisse's private banking arm has assigned a zero lending value for notes sold by Adani Ports and Special Economic Zone, Adani Green Energy, and Adani Electricity Mumbai Ltd., according to a Bloomberg report.
Adani Enterprises was offering shares at Rs 3,112 to Rs 3,276 apiece in the offering. The company's stock closed Wednesday at Rs 2,135.35, 31 percent below the bottom of the price range.
In a statement withdrawing the issue Wednesday night, the company said, "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 would not be morally correct.
The company further said that it is working with book-running lead managers to refund the proceeds received in escrow. The amounts blocked in bank accounts for subscriptions to this issue will also be released.
Hedge fund billionaire Ackman's comments are the latest in the numerous Twitter posts since a January 24 report by US-based activist short-selling firm Hindenburg Research that highlighted debt taken by companies under the Adani Group, a $218 billion Indian conglomerate.
The report alleged improper use of offshore tax havens and stock manipulation by the Adani Group. It also raised concerns about high debt and the valuations of the seven listed Adani companies.
The group has denied the allegations, saying the short seller's narrative of stock manipulation has "no basis" and stems from an ignorance of Indian law. It has always made the necessary regulatory disclosures, it added.
"All transactions entered into by us with entities that qualify as "related parties" under Indian laws and accounting standards have been duly disclosed by us."
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