India’s market regulator has increased scrutiny of deals by the Adani Group over the past year and will study a report issued by short-seller Hindenburg Research to add to its own ongoing preliminary investigation into the group’s foreign portfolio investors, according to two sources aware of the matter.
On Wednesday, the U.S. short-seller said it held short positions in the Indian conglomerate, accusing it of improper use of offshore tax havens and flagging concerns about high debt, leading to a massive sell-off of India-listed shares of the conglomerate's companies.“SEBI has been increasingly examining all the transactions that Adani Group has been undertaking in the listed space," said the first of the two sources, who declined to be identified as the matter is confidential.
In the case of Adani Group’s acquisition of Switzerland-based Holcim Ltd's stake in India's Ambuja Cements Ltd and ACC Ltd, the regulator examined the offshore special purpose vehicle used for the transaction, the first source said. The regulator had sought clarity from the group on these entities when the group approached it for regulatory clearance last year. These responses are under regulatory examination, sources said.
In July, the regulator had initiated a probe of little-known offshore funds based out of Mauritius which had large holdings in Adani's Group's listed companies, which potentially raised concerns about stock price manipulation.
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