Market regulator Securities and Exchange Board of India (Sebi) has increased the scrutiny of the deals done by Adani Group and will review the report issued by short-seller Hindenburg Research to add to its own ongoing preliminary investigation into the group’s foreign portfolio investors, news agency Reuters reported citing two sources aware of the matter.
“SEBI has been increasingly examining all the transactions that Adani Group has been undertaking in the listed space," according to Reuters report. SEBI has been increasingly asking for disclosures that it ordinarily does not.
In the case of Adani Group’s acquisition of Switzerland-based Holcim stake in Ambuja Cements and ACC, the regulator reportedly examined the offshore special purpose vehicle (SPV) used for the transaction.
The use of this SPV was disclosed by the group as part of the acquisition announcement in May 2022. The regulator had found as many as 17 foreign offshore entities involved in the funding of the transaction.
On Wednesday, the US-based Hindenburg Research said it had short positions in Adani Group shares accusing it of fraud, improper use of offshore tax havens and flagging concerns about high debt, leading to a massive sell-off of in Adani Group shares.
The Hindenburg Research report that caused fall in Adani share prices was prepared after two years of research and investigation by this forensic financial research firm. In an official tweet, Hindenburg Research wrote, “Today we reveal the findings of our 2-year investigation, presenting evidence that the Rs 17.8 trillion ($218 billion) Indian conglomerate Adani Group has engaged in a brazen stock manipulation and accounting fraud scheme over the course of decades.”
Shares of Adani Ports and SEZ fell as much as 15 per cent, flagship Adani Enterprises dropped 10 per cent, Adani Power and Adani Wilmar were locked in 5 per cent lower circuit and Adani Total Gas and Adani Transmission were locked in 20 per cent lower circuit.
