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India’s market regulator is investigating the relationship between the Adani Group and a fund incorporated in the British Virgin Islands for a possible violation of share ownership rules, two sources with direct knowledge of the matter said.

The fund is called Gulf Asia Trade & Investment, the sources said. It is owned by Dubai business-person Nasser Ali Shaban Ahli, according to cheques of its website last month, though the site has since been shut down.

The fund has invested in several listed Adani firms, according to data provided by the Organised Crime and Corruption Reporting Project (OCCRP).

The probe is part of the Securities and Exchange Board of India’s (SEBI’s) investigation into the Indian conglomerate after short-seller Hindenburg Research reported in January that offshore shell companies “surreptitiously” owned stock in Adani listed firms, posing governance concerns.

An important question for SEBI investigators is whether 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 declined to be identified as the investigations are ongoing and private.

The Adani Group didn't comment when asked about the SEBI probe and its possible ties with the fund.

The conglomerate has previously said it categorically rejects allegations by OCCRP that there was an “opaque use” of funds by business partners to invest in its listed companies. It has also Hindenburg’s allegations, saying all transactions made with entities that qualified as related parties had been fully disclosed.

SEBI and Gulf Asia didn’t respond to requests for comment. Emails and phone calls to Ahli’s main financial services firm, Al Jawda Trade and Services, based in the United Arab Emirates, went unanswered.

Merger document

Indian law stipulates that listed companies should at least be 25% publicly owned to avoid price manipulation and that all deals involving entities acting in concert must identify and disclose the parties.

The OCCRP in August described Ahli as one of two individual investors with “longtime business ties” to the group’s founder, billionaire Gautam Adani.

The nonprofit global network of investigative journalists also alleges Gulf Asia used offshore structures to buy and sell Adani shares between 2013 and 2018, citing a review of filings from tax havens and internal company emails.

A filing made with the British Virgin Islands corporate registry shows Gulf Asia merged with EZY Global Pte Ltd — a “related entity” of Adani Enterprises, the conglomerate’s flagship firm — in September 2011.

Gulf Asia was the surviving entity. At the time of the merger, EZY shareholders would have had ownership in Gulf Asia but the information provided in the document doesn’t indicate the extent.

EZY had been incorporated in the British territory in 2006, while Gulf Asia was incorporated there in May 2011.

According to data from the OCCRP, Gulf Asia started investing in Adani shares months after SEBI ordered 105 Indian companies in June 2013 to increase the number of shares held by the public to at least 25% of their total floats.

In April 2014, Gulf Asia held shares valued at $51.4m in Adani Enterprises and Adani Power. In March 2017, that had increased to $202m in four group companies — Adani Enterprises, Adani Power, Adani Transmission and Adani Ports — according to the OCCRP data.

Adani Enterprises hasn’t listed Gulf Asia as a related party in its annual reports, though EZY Global was listed for the 2006-11 fiscal years.

SEBI said in August it was close to completing its probe and that it was investigating 24 transactions involving the group’s listed companies and had completed work on 22 of them.

The Adani Group, whose businesses span ports, airports, power and the property sector, has seen its main seven listed firms lose a combined $100bn in market value since the Hindenburg report. 


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