The Securities and Exchange Board of India (SEBI) has launched an investigation into the relationship between the Adani Group, a prominent Indian conglomerate, and the Gulf Asia Trade & Investment fund based in the British Virgin Islands.
The probe aims to determine whether there have been violations of share ownership regulations, following allegations of accountancy fraud and stock manipulation made against the Adani Group.
- In January, a damning report by short-seller Hindenburg Research accused the Adani Group of governance risks, asserting that offshore shell firms clandestinely owned stakes in Adani’s publicly-listed companies.
- This accusation led to SEBI’s scrutiny of the conglomerate’s affairs.
Details of the Investigation
Ownership and Connections
- The Gulf Asia fund, reportedly owned by Dubai-based businessman Nasser Ali Shaban Ali, allegedly invested in Adani’s listed companies after SEBI’s directive in June 2013, which required companies to increase public shareholding to at least 2 percent of their total floats.
- Gulf Asia’s investments in Adani Enterprises and Adani Power totaled $51.4 million by April 2014.
- Over time, this investment reportedly surged to $202 million in four Adani entities, including Adani Transmission and Adani Ports.
- Notably, Adani Enterprises did not disclose Gulf Asia as a related party in its annual reports, raising concerns about transparency.
Acting “In Concert”
- SEBI officials are closely examining whether the Adani Group and the Gulf Asia fund acted “in concert,” potentially violating regulations.
- This scrutiny aims to ascertain the nature of their relationship and the implications for shareholders.
Adani Group’s Response
- The Adani Group vehemently denied all allegations of opaque funding and accountancy fraud.
- In a statement issued earlier, the company dismissed the accusations as a calculated attack on India by vested interests and sections of the foreign media.