Market regulator Securities and Exchange Board of India (Sebi) has increased scrutiny of deals by Adani Group over the past year and will study a fresh report issued by short-seller Hindenburg Research.
This is in addition to Sebi’s ongoing preliminary investigation into the group’s foreign portfolio investments, according to two sources quoted in a Reuters report.
“SEBI has been increasingly examining all the transactions that Adani Group has been undertaking in the listed space,” said one of the sources quoted in the report.
Adani Group shares have come under immense pressure after Hindenburg released a report, accusing the Gautam Adani-led conglomerate of stock manipulation and improper use of offshore tax havens. It also flagged concerns about high debt.
The conglomerate has rejected the report as ‘baseless’ and ‘malicious’ and said it is planning to pursue legal action for causing deep distress to its investors and shareholders.
However, Hindenburg said in its response that it stands by its findings and any legal proceedings against it would prove ‘meritless’. It also asked Adani Group to file a lawsuit in the US where it operates, giving it the opportunity to demand more documents as part of legal discovery.
A majority of analysts questioned the timing of the Hindenburg report, which was released just a few days before the FPO of the group’s flagship entity, Adani Enterprises. However, they agreed that the report is the main reason behind the massive sell-off of domestic shares.
In July 2022, the market regulator initiated a probe of little-known offshore funds based out of Mauritius, which had large holdings in Adani Group’s listed companies, which potentially raised concerns about stock price manipulation.
However, at the time, Sebi’s investigation hit a wall due to lack of information from jurisdictions where these funds were domiciled.
Sources quoted in the Reuters report further indicated that Hindenburg’s investigation raises concerns similar to what the regulator had regarding movement of funds between parties related to the Adani Group through offshore funds back into local companies.