Hindenburg Claims Sebi Chief Has Adani Conflict Which She Denies

Article Content

(Bloomberg) — Hindenburg Research Inc. has accused the head of India’s market regulator of a conflict of interest that it said prevented a thorough examination of allegations of manipulation and fraud at Adani Group, a claim she has strongly denied.

Madhabhi Puri Buch and her husband Dhaval Buch invested in offshore entities that were allegedly part of a fund structure in which Vinod Adani — the brother of billionaire Gautam Adani — also had investments, Hindenburg said in a report published on Saturday.

Article Content

The investments by the couple were made in 2015, two years before Madhabi was appointed to the Securities and Exchange Board of India, Hindenburg said, citing whistleblower information and other documents that Bloomberg could not verify. The fund structure is managed by India Infoline, a financial services and wealth management company.

In a statement released by a company representative, the Bush family said: “We would like to reiterate that we strongly deny the baseless allegations and insinuations contained in the report. All required disclosures have been made to the Securities and Exchange Board of India over the years.”

The standoff between Hindenburg and the Securities and Exchange Commission of India is escalating, weeks after the US-based company was grilled by the Indian regulator over its scathing report on Adani in early 2023. The report wiped more than $150 billion off Adani’s market value in February last year and prompted India’s Supreme Court to order an SEC probe into Adani’s possible misconduct and any suspicious trading activity.

While the Securities and Exchange Commission of India has yet to file a case against the Adani Group, the regulator has sent notices to Adani and Hindenburg officials seeking more information about the suspected regulatory violations. In early July, the U.S. company posted the full notice on its website, explaining the role of an Indian bank and criticizing the Securities and Exchange Commission of India for failing to take any action against Adani.

Article Content

Article Content

Hindenburg’s latest criticism of the Indian regulator for not cracking down on Adani comes at a time when the company is just getting back on its feet and back on an aggressive growth trajectory. Adani Energy Solutions Ltd. has raised $1 billion through a share sale, while its flagship Adani Enterprises Ltd. plans to follow suit.

An Adani Group spokesman said Sunday that Hindenburg’s latest allegations were “manipulative selections from publicly available information.” The port operator has repeatedly denied the short seller’s allegations of stock manipulation and accounting fraud.

“The Adani Group has absolutely no business relationship with the individuals or matters mentioned” in the latest report, a company spokesman said in a stock exchange filing on Sunday. “Our overseas holding structure is fully transparent,” he added, with regular disclosures.

Regulatory checkpoints

Hindenburg’s report on Saturday did not explicitly mention the exact nature of its current exposure to the Indian market. While short sellers have increasingly found themselves in the crosshairs of regulators from the United States to South Korea in recent years, it is unusual for such a firm to criticize the head of an overseas markets regulator over alleged ethical issues.

Article Content

The Box brothers said a more detailed statement would be issued in due course “in the interest of full transparency.”

“We do not hesitate to disclose any financial documents, including those relating to the period when we were ordinary citizens, to any authority that may seek to obtain them,” they said.

Madhabai, a former investment banker and CEO of ICICI Securities, moved to Singapore in 2011 where she joined Greater Pacific Capital, an Asia-focused fund. She returned to India in 2017 to be appointed a full-time member of the Securities and Exchange Board of India. In 2022, she was appointed chairperson.

Hindenburg also raised questions about Madhabhi promoting REITs as a promising asset class without disclosing that Dhaval is now an advisor to Blackstone, which has sponsored two of India’s four listed REITs.

Dhaval has been a senior advisor to Blackstone Private Equity since 2019, before Madhabhi took over as chairman of the Securities and Exchange Board of India.

Blackstone and India Infoline did not comment to Bloomberg on the report outside normal business hours in India.

– With the assistance of B.R. Sanjay, Chiranjeevi Chakraborty, Preeti Singh and Kartik Goyal.

(Updates with context throughout.)

Article Content