Hindenburg Claims India Market Regulator Chief Held Stake in Offshore Funds Linked to Adani Group, According to Reuters

By Jayshree P Upadhyay

MUMBAI – A recent allegation from U.S.-based short-seller Hindenburg Research claims that Madhabi Puri Buch, the head of India’s market regulator, previously held investments in offshore funds connected to the Adani Group.

In a late-night statement, Buch strongly refuted these claims, labeling them as unfounded. She clarified that she had diligently adhered to all disclosure requirements, and any investments in the mentioned fund were made in a personal capacity in 2015—two years before her appointment to the Securities and Exchange Board of India (SEBI).

The market regulator urged investors to remain calm and exercise caution before responding to such reports. Hindenburg’s assertions have prompted renewed calls for a parliamentary inquiry from opposition political parties in India.

The short-seller referenced whistleblower documents, indicating that both Buch and her husband held investments in an offshore fund that received significant investments from associates of Vinod Adani, the brother of Gautam Adani, the Chairman of the Adani Group. In response, the Adani Group dismissed these allegations, asserting that its overseas holding structure is entirely transparent. A spokesperson for the conglomerate described the claims as distractions from a "desperate entity" showing disregard for Indian laws, emphasizing that the Adani Group does not have any commercial connections with the matters or individuals mentioned.

This is not the first time Hindenburg has scrutinized the Adani Group; a previous report in January 2023 accused the conglomerate of misusing tax havens and manipulating stock prices, triggering a $150 billion sell-off in their shares, which has since experienced a partial recovery. Following that report, an inquiry was launched by SEBI, which is ongoing. Six Adani Group companies disclosed receiving notices regarding potential violations of Indian stock market regulations.

Furthermore, SEBI has issued a "show cause" notice to Hindenburg, alleging that the short-seller violated Indian laws by engaging in short-selling based on non-public information, claims which Hindenburg described as "nonsense."

The latest Hindenburg report attempts to connect offshore funds trading in Adani Group shares to the personal investments of Buch and her husband. The report mentions the Bermuda-based Global Opportunities Fund, which, according to financial sources, was utilized by entities linked to the Adani Group for trading shares in the conglomerate. The report alleges that Buch and her husband were investors in one of the sub-funds associated with this fund in 2015.

Documents cited by Hindenburg reveal that in 2017, prior to Buch’s full-time appointment at SEBI, her husband sought to assume sole management of their investment account. In 2018, Buch reportedly sent an email to redeem her husband’s entire investment in the fund. She subsequently became head of the regulatory body in 2022.

Hindenburg stated that its findings warrant further investigation and expressed a desire for increased transparency. In defense, Buch and her husband emphasized that their financial dealings are transparent and stated they have always provided necessary disclosures to SEBI.

The sub-fund they invested in, known as the IPE-Plus Fund 1, clarified that it has not directly or indirectly invested in any Adani Group shares. According to the fund’s asset manager, Buch and her husband’s holdings represented less than 1.5% of the total investments in the fund.

The Adani Group, which operates across various sectors including airports and energy, has benefited from initiatives by Prime Minister Narendra Modi’s government aimed at enhancing India’s infrastructure. The opposition Congress party has previously insinuated that there is a close relationship between the Adani Group and the ruling Bharatiya Janata Party, which have both denied.

A Congress party spokesperson has called for the government to resolve all conflicts of interest surrounding the SEBI investigation into Adani and demanded a comprehensive parliamentary inquiry into the matter.