Adani Group stocks plunge on fresh allegations by Hindenburg against SEBI chief

Adani Enterprises, Adani Ports, Adani Power, and other group company shares plunged by as much as 5-7 percent in early trading hours on Indian bourses as investors opted to play safe, traders said.

NEW FROM US:

Whistleblower Documents Reveal SEBI’s Chairperson Had Stake In Obscure Offshore Entities Used In Adani Money Siphoning Scandalhttps://t.co/3ULOLxxhkU

— Hindenburg Research (@HindenburgRes) August 10, 2024

Earlier, over the weekend, Hindenburg released a fresh report, alleging that SEBI (Securities and Exchange Board of India) chairperson Madhabi Puri Buch may not have conducted a proper investigation into impropriety at Adani group firms because of a potential conflict of interest from having invested in same funds that were used by the Adani executives for moving money.

The rout in Adani Group shares in the morning hours of Monday is estimated to have caused a whopping over $6.3 billion (INR530 billion) loss to investors.

The fresh revelations by the US short seller also seemed to have impacted the overall Indian equity market, with benchmark indices Nifty 50 and BSE Sensex fell too after opening, trading down about 0.6 percent in the morning.

Nifty was down 143 points at 24,224, while Sensex was down 465 points at 79,241 in the early trading hours.

SEBI and Buchs refute allegations

Market regulator SEBI and Madhabi Puri Buch and her husband Dhaval Buch have, however, denied the allegations, releasing detailed rebuttals to the claims made in the Hindenburg report.

The Buchs clarified that their 2015 investment in a fund was made while they were private citizens living in Singapore, nearly two years before Madhabi Buch’s appointment as a SEBI Whole Time Member.

Madhabi Buch and Dhaval Buch also said they held no investments in Adani entities.

SEBI has also confirmed that the chairperson had made proper disclosures at all times.

Hindenburg, however, was quick to counter the Buchs’ explanation, with the research firm taking to microblogging site X on Monday, stating that SEBI Chairperson Madhabi Buch’s response contained several significant admissions and raised critical new questions.

The response, according to Hindenburg, publicly confirmed her investment in what it described as an ‘obscure’ Bermuda/Mauritius fund structure, which was allegedly connected to funds purportedly siphoned by Vinod Adani.

Vinod Advani, a Dubai-based Indian-origin billionaire businessman, is the older brother of Adani Group head Gautam Adani.

Hindenburg challenges chairperson’s disclosures

Hindenburg also highlighted that the fund was managed by a childhood friend of Dhaval Buch, who, at the time, was an Adani director – a detail that, according to the firm, could signal a conflict of interest.

Hindenburg further pointed out that SEBI had been tasked with investigating investment funds linked to the Adani Group, which might include funds that Buch herself was invested in, thereby raising questions about a potential conflict of interest.

Moreover, according to Hindenburg, Madhabi Buch claimed that the two consulting companies she established – one in India and another in Singapore – became dormant immediately after her appointment at SEBI in 2017.

However, her husband reportedly took over the businesses in 2019.

Hindenburg says that Madhabi Buch still owns 99 percent of the Indian entity, Agora Advisory Limited, which is active and generating consulting revenue.

The Singaporean entity, Agora Partners Singapore, was also entirely owned by Buch until March 16, 2022 – during her tenure as a Whole Time Member of SEBI – before she transferred ownership to her husband shortly after becoming SEBI Chairperson.