India’s monopoly regulator probes Adani’s connections to investors as Modi’s office is briefed By Reuters


© Reuters. FILE PHOTO: Birds perch on the logo of the Securities and Exchange Commission of India (SEBI), India’s market regulator, installed on the facade of its headquarters building in Mumbai, India , July 13, 2015. REUTERS/Shailesh Andrade


By Jayshree P Upadhyay, Sarita Chaganti Singh and Devjyot Ghoshal

MUMBAI/NEW DELHI (Reuters) – India’s market regulator is investigating the Adani Group’s links to several investors in its $2.5 billion share sale. , two sources said, amid growing concern in New Delhi about allegations by a US 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 ties between Adani and at least two Mauritius-based companies – Great International Tusker Fund and Ayushmat Ltd. — has joined as a key investor, among others, the unnamed sources said. the secretive nature of exploration.

According to India’s capital requirements and disclosure rules, any entity related to a company founder or group of founders is not eligible to apply under the fixed investor category. determined. One of the sources said the focus of the investigation was on whether any of the fixed investors were “connected” to the founding team.

The Port Energy Transformation Group – controlled by billionaire Gautam Adani, one of the world’s richest men – has seen shares in seven of its companies lose more than $100 billion in market value since then. from Hindenburg Research’s January 24 report. it is the improper use of offshore tax havens and stock manipulation. 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 a request 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.

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.


Hindenburg has accused a private Adani entity of having a small ownership stake in Monarch – which previously worked as a group planner – saying that “this close relationship seems to cause conflict”. clear benefits.” 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 its credentials and ability to penetrate the retail market”. On Elara, Adani said the “insinuation” that the company is related to the group founders in any way is incorrect.

When contacted, Monarch referred Reuters to an exchange disclosure on February 3 that an Adani entity held a “negligible amount of equity,” 0.03%, 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 aftermath of allegations by Hindenburg, which profited from the decline in the value of Adani Group’s assets, has repeatedly become a cause of concern at the national level, including at office of Prime Minister Narendra Modi, two government officials said.

Opposition parties have protested before parliament to call for 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 has said that it always makes the necessary regulatory disclosures. Indian Finance Minister TV Somanathan on Saturday described the Adani issue as a “storm in a teacup” from a macroeconomic perspective.

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