RBI seeks details of banks’ exposure to Adani Group
Adani Enterprises calls off fully subscribed FPO, to return money to investors
Mumbai: The Reserve Bank of India (RBI) has sought details about lenders’ exposures to the Adani Group, banking sources said, a day after the conglomerate withdrew the Rs 20,000-crore follow on public offer (FPO) of its flagship firm Adani Enterprises amid the steep fall in its stock prices.
On Wednesday, Swiss lender Credit Suisse stopped accepting bonds by Adani group companies as collaterals for margin lending.
The going has been tough for the diversified conglomerate over the past week ever since US-based short seller Hindenburg Research levelled a slew of allegations about the group’s operations, calling it the biggest corporate con ever. The Ahmedabad-headquartered group has denied all the allegations but failed to convince analysts and investors.
The RBI gets access to banks’ large corporate borrowers on a regular basis as part of the central repository of information on large credits (CRILC) data base, the banking sources said.
Many a time bank lending happens against pledged securities and a massive fall in the price of the equity shares of the Adani group’s 10 listed entities could have accordingly lowered the value of the pledged securities.
There has been selling pressure in banks’ stocks since the Hindenberg Research’s report released on January 24 as investors are concerned about the impact of the crisis on banks’ books.
Country’s largest lender SBI had said it’s exposure to Adani group is fully secured by cash generating assets, in an attempt to assuage investor concerns.
Another public sector lender Bank of Baroda has said its total exposure to the embattled group stood at Rs 7,000 crore, which are also fully secured.
Government-owned life insurance behemoth Life Insurance Corporation (LIC) has disclosed of having an exposure of Rs 36,474.78 crore to Adani group’s debt and equity, and added that the amount is less than one per cent of its total investments.
Adani Enterprises scrip closed 26.50 per cent down at Rs 1,564.70 a piece on the BSE on Thursday, as against gains of 0.38 per cent on the benchmark.
Meanwhile, the group said it has decided not to go ahead with its Rs 20,000-crore Follow-on Public Offer (FPO) and will return the proceeds to investors.
The announcement comes a day after the company’s FPO was subscribed fully on the last day of the offer on Tuesday.
“The Board of Adani Enterprises Ltd., (AEL) decided not to go ahead with the fully subscribed 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 company said in a statement.
As many as 4.62 crore shares were sought as against an offer of 4.55 crore.
Non-institutional investors put in bids for over three times the 96.16 lakh shares reserved for them, while the 1.28 crore shares reserved for qualified institutional buyers (QIBs) were almost fully subscribed, according to BSE data.
There was, however, a muted response from retail investors and company employees.
