Gautam Adani has decided to cancel the Rs 20,000-crore follow-on public offer (FPO) that barely scraped through on Tuesday after a gaggle of local tycoons chipped in with their own money to take it over the line.

The decision overshadowed the Union budget unveiled earlier in the day by finance minister Nirmala Sitharaman and capped a day of dramatic developments that began with Credit Suisse announcing that the Swiss lender would not accept the Adani group’s bonds as collateral for margin funding to its private banking clients.

The FPO was scrapped after a market rout in Adani group stocks that saw Adani’s personal wealth shrink to $75.1 billion -– which means that he is no longer the richest businessman in Asia or even in India. The share price of Adani Enterprises, the flagship, fell way below the FPO price.

Sitharaman’s budget had seen the bellwether sensex leap as much as 1,200 points in an initial burst of euphoria over tax breaks, savings incentives to senior citizens, big capital spending by the Centre and an attempt to tamp down fiscal deficit in the next fiscal to 5.9 per cent of GDP.

But all those gains dissolved as stocks swooned over what has been ominously termed the Adani effect.

“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,” Adani Enterprises said in a late-night filing with the stock exchanges.

“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,” the company said.

“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.

This is probably the first time that a company has aborted a share sale after it has been fully subscribed.

Quoting a source, the Reuters news agency had reported a few hours before the issue was called off that Sebi, the market regulator, was examining the rout in the shares of the Adani group companies and looking into any possible irregularities in the share sale.

Sebi is also examining allegations made in a report by US short-seller Hindenburg Research that Adani companies did not declare related party transactions as required, Reuters quoted the source as saying.

Earlier in the day, Bloomberg reported that Credit Suisse’s private banking arm has given a zero lending value for debt sold by Adani Ports and Special Economic Zone, Adani Green Energy, and Adani Electricity Mumbai Ltd. However, it added that other banks continue to lend against the group’s debt.

When the lending value is cut to zero, clients have to top up with cash or another form of collateral. If they are unable to do so, their securities can be liquidated.

The overseas bonds floated by the Adani have been at the core of the problem after Hindenburg Research came out with a report that accused the Adanis of financial and accounting deception and poor corporate governance oversight.

The report rattled the bond and stock markets. The meltdown in bond prices was the bigger worry from the beginning because of the risk of fresh margin calls. But no one had expected Credit Suisse to shun the Adani bonds altogether.

“We are working with our book-running lead managers 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,” Adani Enterprises said in a note.

“Our balance sheet is very healthy with strong cash flows and secure assets, and we have an impeccable track record of servicing our debt. This decision will not have any impact on our existing operations and future plans,” the company added.

Wealth shrinks

On Wednesday, Adani was knocked off the perch after investors pummelled his 10 listed entities, dragging down the stock markets as a result.

Forbes said the self-made Ahmedabad-based billionaire had tumbled to the 15th spot on its list of the world’s richest businessmen. Adani’s wealth is now estimated at $75.1 billion.

Mukesh Ambani — who is believed to be one of the Indian tycoons who stepped in to rescue Adani Enterprises’ Rs 20,000 crore follow-on public offer on Tuesday — is now ranked 9th with an estimated wealth of $83.7 billion.

The sensex swung like a pendulum in a 1,956-point range between its highest and lowest points, showing some recovery towards the close, and finished with modest gains of 158 points.

Market circles added that the budget proposal to tax high-value insurance policyholders on maturity and the US Federal Reserve’s decision on interest rates later in the day also weighed on the sentiment.

Adani group stocks faced another rout, falling collectively by up to 28 per cent, which took the overall loss to over $70 billion since Hindenburg Research had come out with its damaging report last Wednesday.

Adani Enterprises was the worst hit, tanking more than 28 per cent on the BSE to close at Rs 2,128.70. Earlier, it had fallen almost 35 per cent to a day’s low of Rs 1,942.

The other group stocks which suffered deep cuts included Adani Ports (19.69 per cent), Ambuja Cements (16.56 per cent), Adani Total Gas (10 per cent), ACC (6.34 per cent), Adani Green Energy (5.78 per cent), Adani Wilmar and NDTV (around 4.99 per cent each) and Adani Power (4.98 per cent).

The carnage in the Adani stocks also spread to banks and LIC, which has a massive exposure to the group. While SBI ended with cuts of 4.80 per cent, Punjab National Bank slumped more than 6 per cent.