VIDEO: Gautam Adani soothes frayed nerves amid marketcap slump

To calm the jittery nerves of Adani Group shareholders, Gautam Adani, Chairman of the Group, released a video message on Thursday morning. Adani Group Chairman Gautam Adani explained the reasons for calling off FPO even after its successful completion.

He says: “…considering the volatility of the market yesterday, our Board strongly felt that it would not have been morally correct to proceed with the FPO.” The main objective of the withdrawal of the IPO was to insulate the investors from potential losses, he views.

Gautam Adani thanked all stakeholders, and particularly the investor community, for their overwhelming support of the Group. He says: “In my humble journey of four decade as an entrepreneur, I have been blessed to receive overwhelming support from all stakeholders and particularly the investor community and I owe all my success to them and for me the interest of my investors is paramount and everything is secondary.”

Adani says the withdrawal of the FPO will not have any impact on the group’s existing operations or its future plans as the fundamentals of Adani Group are “very strong”, balance sheet is “healthy”, and assets are “robust”. Also, he says, the EBITDA levels and cash flows of the Group have been “very strong” and group companies have “impeccable” records of fulfilling debt obligations.

Fortune India’s Take

Fortune India believes the FPO was too large in size and was ill-timed as globally, the interest rates are soaring. During rising interest rates, equity dilution is always difficult.

Also, the Hindenburg report played spoilsport for the Adani group. The market cap of Adani Group was impacted as the Hindenburg Report hit the public domain. The myriad allegations against the Group shook investors' confidence and its market cap plummeted from ₹19.21 lakh crore to ₹11.86 lakh crore, a fall of ₹7.35 lakh crore or 38.26% in 6 days. The poor participation of retail and one of the NII categories in the FPO might have also disappointed the group that currently commands a shareholder register of more than 48 lakh investors. It seems the massive destruction in investors’ wealth and poor response from retail investors are the prime reasons behind the withdrawal of the FPO.