SEBI probes Gautam Adani’s investors’ links to Modi’s office: report
India’s markets regulator is investigating links to some investors in Adani Group’s $2.5 billion stake sale, amid growing concern in New Delhi over allegations by a US short seller against one of the country’s leading industrial conglomerates, two sources said.
The Securities and Exchange Board of India (SEBI) is looking into any violation of Indian securities laws or irregularities in the share sale process, two sources with direct knowledge said.
The watchdog is probing the links between Adani and at least two Mauritius-based companies – Great International Tusker Fund and Ayushmat Ltd. of the study.
Under India’s capital and disclosure requirement rules, any entity associated with the founder or group of founders of a company is not eligible to apply under the anchor investor category. One of the sources said the focus of the investigation will be whether any of the anchor investors are “connected” to the founding team.
Ports-Energy Corp., controlled by billionaire Gautam Adhani, one of the world’s richest men, has lost more than $100 billion in market value since its January 24 Hindenburg report.
The research accused of improper use of offshore tax havens and stock manipulation. Adani has denied the allegations. Last week, the group’s flagship company, Adani Enterprises, called off its secondary share offering, India’s biggest ever sale.
SEBI and Adani Group did not respond to requests for comment on the probe. Great International Tusker Fund and Ayushmat Ltd did not respond to requests for comment.
Elara Capital and Monarch Networth Capital, two of the 10 investment banks that managed the share offering, are under the Sebi scanner, sources said, and Sebi approached both the firms last week.
The roles of Elara and Monarch are being examined by the market watchdog to rule out “any conflict” in the share offering process, a source said.
Meeting at Modi’s office
Hindenburg has alleged that an Adani private firm held a small ownership stake in Monarch – which previously served as the group’s book director – saying “this close relationship creates an obvious conflict of interest”. The short-seller also alleged that Mauritius-based Elara Fund had invested 99% of its market value in three Adani stocks.
Adani said Monarch was selected for the earlier share sale “for their credentials and ability to tap into the retail market”. Regarding Elara, Adani has said it is false that the company is in any way related to the co-founders.
On February 3, Monarch told Reuters in an exchange disclosure that Adani has held an “insignificant”, 0.03% stake in the company since 2016. Reuters could not confirm this from public records. Elara did not respond to a request for comment on the regulator’s investigation and Hindenburg’s allegations.
In recent days, the fallout from Hindenburg’s allegations that it profited from the Adani Group’s property collapse has repeatedly raised concerns nationally, including in Prime Minister Narendra Modi’s office. Government officials said.
The opposition protested in Parliament demanding an independent inquiry into Hindenburg’s allegations.
The central corporate affairs ministry, which is responsible for regulating Indian businesses, has briefed officials in Modi’s office and is in touch with market regulator Sebi, an official said. Reuters could not determine the specifics of these discussions, which have not been previously reported.
On February 2, the ministry began a review of Adani’s past financial statements.
Modi’s office and India’s corporate affairs ministry did not respond to requests for comment on the regulation
Investigation of Adani after publication of Hindenburg report.