India’s market regulator is investigating the Adani Group’s links to a number of investors in Group cancels $2.5 billion share saleThe two sources said, amid growing concern in New Delhi about allegations by a US-based short seller against one of the country’s leading industrial conglomerates.
The Securities and Exchange Commission of India (SEBI) is looking into any potential violations of Indian securities laws or any conflicts of interest during the share sale, two sources with knowledge of the matter said. direct knowledge of the matter said.
The watchdog is investigating the relationships between Adani and at least two Mauritius-based companies, Great International Tusker Fund and Ayushmat Ltd, which participated as key investors, in among others, the unnamed sources said. probe.
According to India’s capital and disclosure requirements rules, any entity related to a company founder or group of founders is not eligible to apply for an anchor investor category. One of the sources said the focus of the investigation was on whether any fixed investors were “connected” to the founding team.
Port-to-energy corporation – controlled by Billionaire Gautam Adanione of the richest people in the world – saw shares in his seven companies lost more than 100 billion USD at market value as of January 24 Hindenburg Research report, accusing the group of improperly using offshore tax havens and manipulating securities. Adani has denied the allegations.
Last week, the group’s flagship, Adani Enterprises, halted its largest-ever secondary share offering in India, due to a sharp sell-off.
SEBI and the Adani Group did not respond to requests for comment on the investigation. Great International Tusker Fund and Ayushmat Ltd also did not respond to requests for comment.
The sources added that SEBI approached the two companies last week.
One of the sources said Elara and Monarch’s roles are being examined by the market watchdog to rule out “any conflict” in the share offering process.
Hindenburg accused a private Adani organization of having a small ownership stake in Monarch – which previously worked as a bookseller for the group – saying that “this close relationship appears to cause a conflict of interest”. clear benefit”. The short seller also alleges that the Mauritius-based fund Elara has invested 99% of its market value in three Adani stocks.
Adani said Monarch was selected to sell shares earlier “because of their credentials and ability to penetrate the retail market.” On Elara, Adani said that “insinuations” that the company is related to the group founders in any way are incorrect.
When contacted prior to the publication of this story, Monarch referred to Reuters for a Feb. 3 exchange disclosure that an Adani entity held a “negligible portion,” 0.03% of the total. shares in the company since 2016. Reuters news agency could not confirm this from the public record.
After the story was published, Monarch said in a stock exchange filing that it had not invested in the Adani stock offering prior to the delisting and had “absolutely no issue of conflict of interest.” “.
In the filing, Monarch said the Reuters report “includes half-truths that paint an inaccurate picture”. The company did not respond to requests seeking details about the alleged inaccuracies in the report.
Elara did not respond to a request for comment on the regulator’s investigation and Hindenburg’s allegations.
Meet Modi’s office
Solicitor General Tushar Mehta, representing the market regulator, told India’s top court at a hearing on Friday that it was related to investor losses following the release of the report. Hindenburg Research, “SEBI at the top of the problem”.
Shares of Adani Enterprises extended their losses to 5% in Friday afternoon trading following the Reuters report, having previously fallen 2.5% earlier in the day. Shares ended the day down 4.1 percent.
In recent days, the aftermath of allegations by Hindenburg, which profited from the decline in the value of Adani Group’s assets, has repeatedly become a cause for concern at the national level, including at office of Prime Minister Narendra Modi, two government officials said.
Opposition parties have protested before parliament about an independent investigation into Hindenburg’s allegations.
The federal corporate affairs ministry, which is in charge of the management of Indian businesses, informed officials in Modi’s office and contacted SEBI, the market regulator, one of the officials. said. Reuters was unable to determine the specifics of these discussions, which have not been previously reported.
The department issued a review of Adani’s previous financial statements on February 2.
Mr. Modi’s office and India’s Ministry of Corporate Affairs did not respond to requests for comment on the regulatory investigation into Adani after the Hindenburg report was released.
The group has previously said that Hindenburg’s allegations of stock manipulation are “unfounded” and stem from a lack of understanding of Indian law. It said it has consistently made the necessary regulatory disclosures.
India’s finance secretary TV Somanathan on Saturday described the Adani issue as a “storm in a teacup” from a macroeconomic perspective.
