Adani Shares Trade Lower After Report Says SEBI Investigating Adani's Relationship With Gulf Asia Fund

Market Regulator The Securities and Exchange Board of India (SEBI) is investigating the ties between Gautam Adani's ports-to-power conglomerate Adani Group and Gulf Asia Trade & Investment, a fund incorporated in the British Virgin Islands; said a Reuters report on Wednesday citing sources who are privy to the development.

As per the report the probe has been launched to find out if any share ownership rules were violated. Gulf Asia Trade & Investment is owned by Dubai businessman Nasser Ali Shaban Ahli, according to checks of its website last month although the site has since been pulled down, the report added.

According to the Organised Crime and Corruption Reporting Project (OCCRP) and data that the investigative journalist group has provided to Reuters, the fund has invested in several listed Adani companies.

The probe is part of SEBI's investigation into the Indian conglomerate after the US-based Short Seller Hindenburg Research accused the group of accountancy fraud and stock manipulation on January 24 this year. However, the Indian conglomerate termed the charges as baseless.

Hindenburg Research maintained that offshore shell companies "surreptitiously" owned stock in Adani-listed entities, posing governance concerns.

One important question for SEBI investigators is if Gulf Asia's ties with the Adani Group were such that it would be deemed to be acting "in concert" with key Adani shareholders, said the sources, who refused to be identified as the investigations are ongoing and private.

The conglomerate earlier said it categorically rejects OCCRP allegations that there was an "opaque use" of funds by business partners to invest in its listed firms. It also denied allegations made by Hindenburg, saying all transactions made with entities that qualified as related parties had been fully disclosed.

The Adani Group did not comment on the SEBI probe and its possible ties with the fund when contacted by Reuters.
According to data shared by the OCCRP with Reuters, Gulf Asia started investing in Adani stocks months after SEBI directed 105 Indian companies in June 2013 to raise the number of shares owned by the public to at least 25% of their total floats.

In April 2014, Gulf Asia owned $51.4 million worth of shares in Adani Enterprises and Adani Power. In March 2017, the amount increased to $202 million in four group firms - Adani Enterprises, Adani Power, Adani Transmission, and Adani Ports, according to the OCCRP data.

In August, SEBI said that it was close to completing its probe. At the time, it said that it was probing 24 transactions involving the group's listed firms and had completed work on 22 of them.
Adani Enterprises has not listed Gulf Asia as a related party in its annual reports, although EZY Global was listed for the 2006-2011 fiscal years.

Following this report, today the share price of most Adani group companies traded lower. Adani Enterprises shares closed 0.07% lower at Rs 2496.00 per share, and Adani Ports shares fell 0.52% at Rs 814.95 per share.