Two sources with direct knowledge of the matter said the market regulator is looking into possible violations of securities laws or a conflict of interest in the share sale process.
The watchdog is probing links between Adani and at least two Mauritius-based firms – Great International Tusker Fund and Ayushmat – which participated as anchor investors, among others, said sources, who refused due to the confidential nature of the fund. Investigated the matter on the condition of anonymity.
Under capital and disclosure requirement regulations, any entity belonging to the founder or founder group of the company is ineligible to apply under the anchor investor category. One of the sources said the focus of the investigation would be whether the anchor investors were “connected” to the Founders Group.
Ports to Energy Group – Controlled by Billionaire Gautam Adani, one of the world’s richest men — has seen the market value of shares of seven of his companies decline by more than $100 billion since a Jan. 24 report by Hindenburg Research that accused him of offshore tax havens and stock manipulation. alleging improper use. Adani has denied the allegations. Last week, the group’s flagship arm Adani Enterprises pulled India’s biggest-ever secondary share offering due to a sharp selloff.
Sebi and the Adani group did not respond to requests for comment about the probe. The Great International Tusker Fund and Ayushmann also did not respond to requests for comment.
Also under Sebi’s scanner are Elara Capital and Monarch Networth Capital, two of the 10 investment banks that managed the share offer, sources said, adding that Sebi had approached the two firms last week.
One of the sources said the roles of Elara and Monarch are being probed by the market regulator to avoid “any conflict” in the share offer process.
Shares of Adani Enterprises extended their losses to 5% in Friday afternoon trade after the Reuters report, down 2.5% earlier in the day.
meeting with pmo
Hindenburg has alleged that a private Adani entity had a small ownership stake in Monarch – which had previously acted as a bookrunner for the group – saying that “this close relationship is clearly a conflict of interest”. It reflects.” The short-seller also alleged that a Mauritius-based fund of Elara has invested 99% of its market value in the three Adani shares.
Adani has said that Monarch was chosen for the previous share sale “for their credibility and ability to tap into the retail market”. On Elara, Adani has said the “impression” that the firm was in any way related to the group’s founders was incorrect.
When contacted, Monarch cited exchange disclosures to Reuters on February 3, which said the Adani entity held “an insignificant”, 0.03% stake in the company since 2016. Reuters was unable to verify 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 he stood to profit from a decline in the value of the Adani Group’s assets has repeatedly become a cause of concern at the national level, including through Prime Minister Narendra Modi’s office. , said two government officials.
Opposition parties protested in Parliament for an independent inquiry into Hindenburg’s allegations.
An official said the corporate affairs ministry, which is responsible for regulating Indian businesses, has passed on the information to officials in Modi’s office and is in touch with markets regulator Sebi. Reuters could not determine specific details of these discussions, which were not previously reported.
The ministry started the review of Adani’s past financial statements on 2 February.
Modi’s office and the corporate affairs ministry did not respond to requests for comment about the regulatory probe into Adani following the publication of the Hindenburg report.
The group has previously said that Hindenburg’s allegations of stock manipulation had “no basis” and stemmed from ignorance of Indian law. It has said that it has always made necessary regulatory disclosures. Finance Secretary TV Somanathan on Saturday described the Adani issue as a “storm in a teacup” from a macroeconomic point of view.