Six short-sellers in Adani stocks under ED, Sebi lens for insider trading

SC report, stock revival to help Adani group raise Rs 21K cr: Bankers

3 min read Last Updated : May 21 2023 | 4:03 PM IST

Six short sellers have come under the lens of the Enforcement Directorate and the Securities and Exchange Board of India for playing a crucial role in the Rs 12 trillion Adani group share rout this January and February.

The market regulator is probing insider trading by these entities, said sources with direct knowledge about the development.

While Hindenburg Research made a disclaimer in its January 24 report that it had taken short-selling positions in the US-listed securities of the Adani group, the ED and Sebi report hinted that six local entities had taken positions before the Hindenburg report was made public.

The ED said it found intelligence about potentially violative and concerted selling by specific parties just ahead of the publication of the Hindenburg report, which led to credible charges of concerted destabilisation of the Indian markets. Therefore Sebi ought to be probing such actions under the relevant securities laws.

"This is a case of insider trading and hence the Sebi must identify these short sellers," said a source close to the development.

The Adani group did not comment on the report.

Corporate lawyers said Sebi's final report will be able to pinpoint the role of these entities and how they had access to the Hindenburg report even before it was made public.

Group seeks shareholders's nod for fund raise

The Supreme Court report and a revival in Adani group shares since February-end will help the group raise Rs 21,000 crore through the sale of shares in Adani Enterprises and Adani Transmission, say bankers.

The Adani Green Energy board is meeting on May 24 to clear a plan to raise funds from institutional shareholders.

Both AEL and ATL have sought shareholders' permission to sell shares to institutional investors and as soon as it is in, bankers will be appointed to manage the share sale.

"The group has curtailed plans to acquire new capacity and reduced expansion. The focus is on debt repayment and complete ongoing projects on war footing. The group will expedite the share sale to repay debt," said a banker after the SC panel report was reported by the media.

The promoters currently own 69.23 per cent stake in Adani Enterprises and 71.65 per cent in Adani Transmission. They hold 57.26 per cent stake in Adani Green Energy.

In its notice to shareholders, AEL said it would use the proceeds to repay or prepay debt and/or fund its growth plans.

The Supreme Court-appointed expert panel didn't find any regulatory failure on Sebi's part in handling the Hindenburg Research report.

The report quoted Sebi data that showed the retail investment participation in Adani stocks has increased multifold after January 24. It mentioned that the mitigating measures taken by the Adani Group to pre-pay its debt by selling shares in Adani Enterprises to US based fund GQG Partners has helped in building confidence in the stocks and helped the stocks to stabilise.