Adani's regulatory challenges not over as other Sebi probes continue

While there's nothing to indicate whether the conglomerate will face any fines or regulatory censure on pending matters, it means that there'll likely be more Sebi orders on the Adani Group

By Saikat Das and Advait Palepu

 

India’s market regulator is still investigating some accusations leveled by US short seller Hindenburg Research against the Adani Group, according to people familiar with the matter, signaling that the conglomerate received only a partial reprieve with Thursday’s orders. 

There are some pending investigation strands, such as whether the Gautam Adani-led group has followed minimum public shareholdings guidelines, still before the Securities and Exchange Board of India, or Sebi, said one of the people. At least three to four cases are still being examined, another person said. These people spoke on the condition of anonymity as the information is not public.

 

The regulator has not yet received responses from some stakeholders related to these cases, one person added.

 

While there’s nothing to indicate whether the ports-to-power conglomerate will face any fines or regulatory censure on the matters pending before Sebi, it means that there’ll likely be more Sebi orders on the Adani Group. 

 

An Adani Group representative didn’t immediately respond to an email seeking a comment on pending Sebi probes. 

 

The billionaire-founder also remains indicted by the US Department of Justice last year in an alleged $250 million bribery scheme. Adani’s efforts to get those charges resolved have stalled in recent months as the Washington and New Delhi have clashed on issues like trade, Russian oil and India’s conflict with Pakistan, Bloomberg News reported this month citing people familiar with the matter.

 

Billionaire Adani and the investors cheered Sebi’s latest orders that cleared the group of Hindenburg’s allegations in early 2023 that it used the so-called related party transactions to route funds into its listed companies in two cases. The combined market value of Adani Group companies rose by more than $6 billion to $156 billion on Friday as all the conglomerate’s listed firms rallied.

 

Sebi “has reaffirmed what we have always maintained, that the Hindenburg claims were baseless,” Asia’s second-richest person said in an X post. Adani companies’ shares surged on Friday.

 

The scathing January 2023 report by the short-seller that has since disbanded had alleged large-scale corporate fraud, triggering a stock rout that at one point eroded over $150 billion market value for the listed Adani entities and halted Adani’s debt-fueled expansion spree.

Court-Mandated Probe 

It also led to India’s top court asking Sebi to probe Hindenburg’s accusations against the conglomerate. 

 

The scope of the investigation spanned potential violations of minimum public shareholding rules in Adani Group firms, stock price manipulation through the foreign portfolio investment route and allegations of insider trading. 

 

It also included 13 matters on related party transactions, Sebi said in its status report to the court in August 2023. Sebi’s Thursday order cleared Adani on two of these related-party transaction investigations.

 

Adani Group in recent months has begun clawing back some of the ground it lost in the aftermath of the Hindenburg report and the DOJ indictment. It has secured funding from marquee investors and is back to planning multi-billion-dollar expansion plans, despite the regulatory overhangs at home and overseas.