The Securities and Exchange Board of India (SEBI) has issued a warning to two Mauritius-based funds with significant investments in the Adani Group, threatening penalties and potential cancellation of their licenses over failure to disclose key shareholder information, according to a SEBI document reviewed by Reuters.
The funds in question – Elara India Opportunities Fund and Vespera Fund – have been under scrutiny since 2023, when US-based Hindenburg Research accused the Adani Group of stock manipulation and improper use of offshore tax havens. While the Adani Group denied any wrongdoing, the allegations led to a sharp market sell-off before shares gradually rebounded.
The regulations in place mandate that at least 25% of listed companies be held by public shareholders. Hindenburg’s report alleged the Adani Group violated this rule, claiming that several offshore funds holding Adani stocks were closely linked to the conglomerate.
The March 28 SEBI document reveals that the two Elara-managed funds have repeatedly failed to provide “granular disclosures” on their shareholders, despite multiple requests since 2023. “To date, this has not been provided by these FPIs to SEBI… They have also not provided any reasons,” the document states, adding that the lack of cooperation has obstructed the regulator’s investigation into Adani’s compliance with minimum public shareholding norms.
Additionally, SEBI noted that the funds failed to report stake acquisitions exceeding the 5% threshold in certain Adani firms, which is a violation of disclosure rules.
The exact penalties the funds could face remain unclear.
(With inputs from Reuters)