Billionaire Gautam Adani’s firms under investigation by Indian regulators, finance minister says

Firms controlled by Indian billionaire Gautam Adani are being probed by the country’s markets regulator over compliance with local securities rules, the junior finance minister told parliament on Monday.

Besides the Securities and Exchange Board of India, Directorate of Revenue Intelligence, (DRI), is also “investigating certain entities” belonging to the Adani Group for compliance to another set of local laws, junior finance minister Pankaj Chaudhary said in response to a legislators question in the Indian parliament. Chaudhary didn’t elaborate on the investigations or name the Adani group companies being probed.

The minister’s comment follows a local media report in June that accounts of three Mauritius-based funds, which have a significant exposure to Adani Group stocks, were frozen by the national stock depository due to insufficient disclosures. While the ports-to-power conglomerate strongly pushed back against the report, investor concerns stoked a stock rout that shaved billions of dollars off Adani companies’ market value.

“We have always been transparent with all our regulators and have full faith in them,” an Adani group spokesperson said in a statement on Monday. The conglomerate had always complied with SEBI regulations and made full disclosures on “specific information requests” from the regulator in the past, according to the statement, which added that the group had not received any communication or information requests recently.

The DRI probe relates to a show-cause notice issued to Adani Power five years ago. The federal agency gave an order saying that there was “no overvaluation of equipment” by Adani Power — a ruling that was challenged in a local tribunal and is sub judice, the spokesperson said, without elaborating.

Chaudhary declined to say if another probe by the federal income tax department was under way citing legal rules but clarified that no investigation was being conducted by the Enforcement Directorate that looks into economic crimes including violations of India’s money laundering laws.

Unusual allocation

The three Mauritius-based funds held more than 95% of their assets in Adani Group firms — a highly unusual allocation strategy for foreign funds.

Chaudhary told the legislators on Monday that there was no restriction on the funds, except for a 2016 order that only applied to issuances of global depository receipts by certain Indian listed companies.

Shares of all six Adani group companies, including flagship Adani Enterprises, Adani Green Energy  and Adani Ports & Special Economic Zone, fell Monday afternoon in Mumbai.

Adani’s net worth, which had surged the most in the world in March, has now taken a hit and is now at $54.6bn, according to the Bloomberg Billionaires Index. The tycoon is now the fourth-richest person in Asia, down from No 2 earlier in 2021.

Bloomberg News. More stories like this are available on bloomberg.com