SEBI is investigating Adani Group's ties with Gulf Asia fund
India's market watchdog, the Securities and Exchange Board of India (SEBI), is looking into the connection between Adani Group and Gulf Asia Trade & Investment. The goal of the investigation is to find out if there's a breach of share ownership regulations, Reuters has reported. Gulf Asia, owned by Dubai entrepreneur Nasser Ali Shaban Ahli, has invested in several Adani Group companies listed on the stock exchange, as claimed by the Organised Crime and Corruption Reporting Project (OCCRP).
The key question is whether they were acting "in concert"
A key part of SEBI's inquiry is determining if Gulf Asia's relationship with Adani Group was close enough to be considered "in concert" with major Adani shareholders. Indian law requires that listed companies be at least 25% publicly owned to prevent price manipulation, and all transactions involving entities acting in concert must identify and disclose the parties involved. In August, the OCCRP claimed that Ahli was one of two investors with "longtime business ties" to Adani Group founder Gautam Adani.
Gulf Asia has made investments in Adani shares
Gulf Asia reportedly began investing in Adani shares just months after SEBI directed 105 Indian firms in June 2013, to raise public shareholding to at least 25% of their total floats. By April next year, Gulf Asia held $51.4 million in shares of Adani Enterprises and Adani Power. This amount grew to $202 million across four group companies—Adani Enterprises, Adani Transmission, Adani Power, and Adani Ports—by March 2017.
Adani Group has denied the allegations
The Adani Group has previously dismissed OCCRP's allegations of "opaque use" of funds by business partners to invest in its listed firms. The conglomerate also denied claims made by short-seller Hindenburg Research, stating that all transactions with related parties were fully disclosed. Neither SEBI nor Gulf Asia have commented on the matter, and Reuters was unable to reach Ahli.
The investigation could potentially impact Adani Group's market value
Since the Hindenburg Research report in January, the main seven listed companies of the Adani Group have lost a combined $100 billion in market value. The group's ventures cover ports, airports, power, and property sectors. In August, SEBI announced it was nearing the end of its investigation, having examined 24 transactions involving the group's listed firms and completed work on 22 of them.
