Aborted FPO: SEBI probes Adani-investors links

Mahila Congress members protest against the Centre over the Adani issue, in New Delhi on Thursday. PIC/ANI

The market regulator is investigating Adani Group's links to some of the investors in the conglomerate's aborted $2.5 billion share sale, two sources said, amid growing concern in New Delhi about a US short-seller's allegations against one of the country's top industrial groups.

The Securities and Exchange Board of India (SEBI) is looking into any potential violation of Indian securities laws or any conflict of interest in the share sale process, said the two sources who have direct knowledge of the matter.

SEBI is investigating relationships between Adani and at least two Mauritius-based firms - Great International Tusker Fund and Ayushmat Ltd - that participated as anchor investors, among others, said the sources, who spoke on the condition of anonymity due to the confidential nature of the probe.

Gautam Adani and PM Narendra Modi. The corporate affairs ministry has briefed the PMO on the issue, govt officials told Reuters. File pic

Under India's capital and disclosure requirement rules, any entity related to a company's founder or the founder group is ineligible to apply under the anchor investor category. One of the sources said the focus of the probe would be whether any of the anchor investors are "connected" to the founder group.

The ports-to-energy conglomerate - controlled by billionaire Gautam Adani, one of the world's richest people - has been accused of improper use of offshore tax havens and stock manipulation. Adani has denied the charges.

Also Read: SC seeks views of Centre, SEBI on Hindenburg report on Adani firms

Also under the SEBI scanner are Elara Capital and Monarch Networth Capital, two of the 10 investment banks that managed the share offering, the sources said, adding that SEBI had approached the two firms last week.

The roles of Elara and Monarch are being examined by the market watchdog to rule out "any conflict" in the share offering process, one of the sources said.
Hindenburg has alleged one Adani private entity had a small ownership stake in Monarch, saying that "this close relationship seems to pose an obvious conflict of interest." It also alleged that a Mauritius-based fund of Elara has invested 99% of its market value in three Adani stocks.

The corporate affairs ministry, responsible for regulating Indian businesses, has briefed officials in Prime Minister Narendra Modi's office and been in touch with SEBI, the market regulator, one of the officials said. Reuters could not determine the specific details of these discussions, which have not been previously reported.

Adani crisis deepens

Meanwhile, Moody's downgraded on Friday the ratings outlook for some Adani Group entities, while MSCI said it would cut the weightings of some companies in its indexes. MSCI reassessed the size of some Adani companies' free floats, having determined there was "sufficient uncertainty" surrounding some investors in Adani companies.

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No. of firms, banks part of SEBI probe

SC: Investor interests must be protected

The Supreme Court, hearing two petitions related to large investor losses following Hindenburg Research's report on the Adani Group, said on Friday that interest of the investors needs to be protected. "Now the stock market is not a place where only high-value investors invest. It is also a place where ... investment is made by a wide spectrum of middle class," Chief Justice D Y Chandrachud said. "The point of concern here is how (to) ... protect the interest of investors." The SC sought views of the Centre and market regulator SEBI on PILs alleging exploitation of innocent investors and "artificial crashing" of the Adani Group's stock value. The hearings will continue on Monday.

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