India’s Capital Markets Regulator Set to Submit Final Adani-Hindenburg Report

India’s capital markets regulator, the Securities and Exchange Board of India (SEBI), is expected to present its conclusive findings on the allegations made by US-based Hindenburg Research against the Adani Group to the Supreme Court within this week.

Completion of Investigation and Report Submission

The upcoming report signifies the culmination of SEBI’s comprehensive inquiry into the matter, as stated by informed sources mentioned in the Economic Times.

Key Aspects Explored

SEBI’s investigation encompassed a range of facets, including an examination into potential manipulation of share prices of Adani Group entities through exploiting certain gaps in the minimum public shareholding (MPS) regulations. Additionally, the inquiry sought to ascertain whether the group failed to disclose transactions involving related parties.

Expected Findings

Based on insights from sources cited in the ET report, SEBI’s scrutiny is unlikely to reveal significant breaches of MPS regulations by the Ahmedabad-based conglomerate. However, there might be pertinent revelations pertaining to the investigation into transactions involving related parties.

Deadline and Judicial Proceedings

The Supreme Court has granted SEBI until August 14 to conclude its investigation and present the final report. The case is scheduled for hearing on August 29.

Impact of Hindenburg Report

The release of the Hindenburg report on January 24 had substantial repercussions on the market capitalization of Adani Group’s publicly listed firms. Allegations of transgressions in related-party transactions and MPS norms had led to a significant decline in valuation.

Deloitte Ends Association

Deloitte Haskins & Sells, a global auditing firm, officially severed its six-year affiliation with Adani Ports & SEZ on August 12. This decision was primarily prompted by concerns regarding the thorough examination of certain company transactions, including those mentioned in the Hindenburg report, to determine their classification as related-party transactions.

Challenges and Overseas Jurisdictions

SEBI faced formidable challenges during the investigation of Minimum Public Shareholding (MPS) concerns outlined in the Hindenburg report. Numerous complex transactions, spanning multiple foreign jurisdictions, posed difficulties in obtaining comprehensive information.

Lack of Cooperation and Implications

Cooperation from overseas jurisdictions was lacking, hindering SEBI’s access to crucial details about foreign portfolio investors (FPIs) holding Adani Group stocks. Consequently, the regulator’s case against the conglomerate may not be as robust, as indicated by sources in the ET report.

Ownership Pattern and Transparency

SEBI’s suspicions extended to the ownership structures of 13 overseas entities (12 FPIs and one financial institution) that held Adani stocks. These concerns were fueled by the belief that some public shareholders in Adani Group companies might actually be proxies for promoters.

Global Investment and Investigation

The regulator identified 42 investors across seven jurisdictions who invested in these 13 entities. SEBI sought detailed ownership information from these diverse regions to facilitate its MPS-related investigation.

Note: This article is for informational purposes only and does not constitute legal or financial advice.