The Adani FPO, for sure, has maintained its position as a pioneer in the Indian stock market. The FPO was always expected to make its mark in the history of the Indian Stock Market. However, recent developments indicate that it has made history for all the wrong reasons.

The Adani FPO was slated to be the first 'mega FPO' of the Indian market, and is now the first mega FPO to be 'called off'.

The Adani group marketcap has been declining since the Hindenburg report hit the public domain. The myriad allegations of misdeeds laid upon 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%. Within 6 days that translates into a fall of ₹1.22 lakh crore per day.

The Hindenburg report alleged Gautam Adani, Chairman of the Adani Group, amassed a net worth of roughly $120 billion, adding over $100 billion in the past 3 years, largely through alleged stock price manipulation in the group’s seven key listed companies, which have spiked an average of 819% in that period.

“Even if you ignore the findings of our investigation and take the financials of Adani Group at Face Value, its 7 key listed companies have 85% downside purely on a fundamental basis owing to sky-high valuations,” the report states.

The Hindenburg Report, when read between the lines, alleged the Adani Group shares have gone through major rounds of pumping before the FPO such that even the FPO price was far above what the realistic valuation of the shares may have been.

The allegation levelled by Hindenburg Report spooked retail investors. Though the FPO was subscribed with the help of Ultra Wealthy Individuals in the HNI category and Institutional Investors whereas, it got a lukewarm response from the NIIs category that are entitled to bid under ₹10 lakh and retail investors that can apply for less than ₹2 lakh worth of shares.

The retail portion barely touched the double-digit of subscription at 13% (0.13 times) of offered 2.17 crore shares. NII category between ₹2 lakh and ₹10 lakh got the lowest response as it could not even cross double digit and stood at just 3% (or 0.03 times) of offered 30.45 lakh shares.

At the time of launching the FPO, Jugeshinder Singh, Group CFO of Adani Group said the “main aim of the FPO is to expand the shareholder registry.”

The objective of the FPO was to bring more retail investors into Adani Enterprise's fold. But jittery retail investors stayed away from the FPO after Hindenburg Research published its damaging report last week. The poor performance in retail and one of the NII categories might have disappointed the group that currently commands a shareholder register of more than 48 lakh investors.

It seems that the poor response from retail investors did not go well with the Board of Adani Group, which ultimately called off the FPO and decided to return the money to investors.

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