No clean chit to Adani by SEBI yet

India’s market regulator, SEBI, has submitted an updated report to the Supreme Court regarding its investigation into the Adani Group, prompted by the Hindenburg report. The report reveals that out of the 24 initiated investigations, 22 have concluded, leaving 2 still ongoing. SEBI affirms its commitment to take appropriate actions based on investigation outcomes and in compliance with the law across various aspects. Currently, it awaits precise details from external agencies for two ongoing probes. During its assessment, SEBI examined 13 transactions of the Adani Group to assess potential violations of rules related to dealings with associated parties.

The regulator also acknowledged its scrutiny of offshore transactions involving 12 foreign portfolio investors (FPIs) holding shares in Adani Group companies. Requests for information about these FPIs have been sent to five foreign countries. However, the challenge lies in entities connected to these investors being in tax haven jurisdictions, complicating the determination of economic interests of shareholders in these FPIs.

SEBI clarified that listed companies must maintain a minimum of 25% public shareholding, with FPIs being part of the non-promoter/public shareholders’ category in these companies. Additionally, an interim report about the trading of Adani group stocks before and after the Hindenburg report’s release received approval from the relevant authority on August 24th. This interim report is a work in progress, actively gathering information from external agencies and entities.

In the recent past, the Adani Group’s listed firms saw a market value decline of over $100 billion due to concerns raised by US-based Hindenburg Research about governance issues. The group firmly denied any wrongdoing. In response, the Supreme Court directed SEBI to investigate these allegations and present findings to a panel of six members, including a retired judge and experienced bankers. By May, the appointed panel commented on the limited progress of SEBI’s investigation, describing it as a “journey without a destination.” Nonetheless, the panel extended the deadline for SEBI to finalize its inquiry.