India’s market regulator, SEBI, found that twelve offshore funds investing in Adani group companies violated disclosure rules and exceeded investment limits. This discovery, reported by Reuters, follows an initial disclosure by Reuters in August last year. SEBI had uncovered breaches in regulations related to disclosures by listed entities and restrictions on offshore fund holdings.
The offshore funds were reporting their investments in Adani group companies individually, whereas SEBI required disclosure at the fund group level. Additionally, SEBI is investigating the relationship between the Adani Group and one of the funds to determine if there was potential coordination with the conglomerate’s primary shareholders, a claim Adani has denied.
SEBI Issues Notices to Offshore Investors in Adani Group
Earlier this year, sources disclosed that the regulator, SEBI, sent notices to twelve offshore investors linked to the Adani group. The notices outlined allegations and requested clarification on violations of disclosure requirements and investment limits.
Offshore funds were reporting their investments in Adani group companies individually, but SEBI required disclosure at the fund group level, according to Reuters. Eight of these offshore funds have reportedly submitted written requests to SEBI, seeking to settle the charges by paying a penalty without admitting guilt.
Previously, it was reported that out of the 13 foreign portfolio investors (FPIs) identified by SEBI for failing to disclose information about their ultimate beneficial owners in listed Adani entities, eight are seeking resolution with the regulator regarding securities violation issues.
Legal teams representing Albula Investment Fund, Cresta Fund, MGC Fund, Asia Investment Corporation (Mauritius), APMS Investment Fund, Elara India Opportunities Fund, Vespera Fund, and LTS Investment Fund have collectively submitted 16 settlement applications to SEBI, as per The Economic Times report.
SEBI Investigates 13 Foreign Portfolio Investors (FPIs)
The regulator, SEBI, identified 13 Foreign Portfolio Investors (FPIs) for examination, including the initial eight mentioned earlier and five additional entities—Emerging India Focus Funds, EM Resurgent Fund, Polus Global Fund, New Leaina Investments, and Opal Investments. However, SEBI faced challenges in identifying the ultimate beneficial owners of these FPIs and their potential ties to the Adani Group.
Adani Ports & SEZ is expected to report a 137.4% change in its profit after tax (PAT) on a year-on-year basis, driven by organic volume growth and the consolidation of Karaikal Port, according to a report from Kotak Institutional Equities.
Adani Group Releases Pledged Shares
The Adani Group released around Rs 26,500 crore of pledged shares in fiscal year 2024 across its five listed companies, marking the fourth consecutive year of such releases. Analysts attribute this trend to improved cash earnings, following similar releases of over Rs 15,000 crore each in FY23 and FY22 and Rs 1.27 lakh crore in FY21.
In FY24, Adani Power saw the largest release of promoter-pledged shares, followed by Adani Ports & SEZ and Adani Green Energy Ltd. In March 2023, Adani Power had pledged 72.72 crore promoter shares, which have now reduced to 44.56 crore, indicating a release of around 28.16 crore shares valued at Rs 15,000 crore.
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