Adani’s brother plays opaque, powerful role at embattled dynasty

Dubai – In August, as India’s Adani Group neared the completion of its US$10.5 billion (S$14 billion) purchase of two cement businesses, the conglomerate and its banks put out some particularly complicated filings.

Buried in an 85-page document was a diagram of seven unlisted firms registered in the British Virgin Islands, Mauritius and Dubai. They were interlinked, and one would be buying the cement company’s shares in the open market.

But the ultimate beneficiary of the seven entities was not listed as the group’s public face and chairman, billionaire Gautam Adani. Instead, the filings said their beneficial owners were his older brother, Vinod, and Vinod’s wife Ranjanben.

Neither Mr Vinod Adani nor his wife hold managerial positions in any listed Adani companies, and they are not among the top executives listed on the conglomerate’s website. Yet, the appearance of their names in connection with the group’s largest acquisition suggests the influence that Mr Gautam Adani’s little-known brother wields in the sprawling empire – as well as the family’s style of using a maze of small companies when doing big business.

In recent weeks, Vinod – who has worked in Dubai for years and is described in filings as a Cypriot national – has come into the international spotlight after short-seller Hindenburg Research named him prominently in its

scathing report on the Adani Group

that fuelled a rout of more than US$140 billion in its shares.

“Vinod Adani, through several close associates, manages a vast labyrinth of offshore shell entities,” the report said, identifying entities in Mauritius, Cyprus, the United Arab Emirates, Singapore and several Caribbean islands. These entities “regularly and surreptitiously transact with Adani”, it said.

The Adani Group has published a 413-page rebuttal denying all Hindenburg’s allegations.

Staff at Vinod’s Dubai offices directed requests for comment to the conglomerate’s headquarters in India.

“Vinod Adani does not hold any managerial position in any Adani listed entities or their subsidiaries and has no role in their day-to-day affairs,” an Adani Group spokesman said in response to a detailed set of questions sent by Bloomberg News.

Complex conglomerate

Even though Vinod does not hold any formal positions or participate in daily operations, he is a key negotiator for the Adani Group when it is raising funds from international markets and is involved in planning the group’s strategic direction, a person familiar with the matter said. A close confidant of Gautam, Vinod likes to keep a low profile and deals directly with family members, the person said. The family does not believe it has done anything improper with business structures involving Vinod, according to the person.

Still, the Adani family plans to look more closely at some of the entities it has built to see how best to structure them to reassure investors, the person said.

The network of small firms built by the Adani dynasty offers one of the starkest reminders yet of how complex family-run conglomerates can be in India, now one of the world’s fastest-growing economies. While many companies have hired professional managers, others are still dominated by familial ties that can make it harder for banks and investors to fully know whom they are doing business with, where the money is flowing and what regulatory minefields might loom.

Vinod is a billionaire via his share holdings in listed Adani Group companies. Still, he lives a largely quiet life in Dubai, a people familiar with the matter said. A filing in Cyprus puts his age at 74.

The Adani Group is a vast conglomerate with listed and unlisted subsidiaries doing business in everything from ports to power, with a reach spanning from India to Africa and Australia. Several debt filings include Vinod as a key figure within the conglomerate, saying the Adani Group should be understood to mean Vinod, Gautam and another brother Rajesh, who is managing director, as well as other entities such as a family trust.

Mr Alex Cobham, an economist and chief executive of British-based Tax Justice Network, said that the multiple layers, the relative lack of transparency of the jurisdictions and the type of entities used for the cement deal pose several risks for investors and regulators.

“These include the risk that timely updates to beneficial ownership are not made; the risk that the complexity allows abuse of tax and regulation in the jurisdictions where real activity takes place,” Mr Cobham said. “And, perhaps most relevant here, the risk that investors may be harmed because they are denied the information necessary to value a company accurately.”

In Dubai, other ties between Vinod and Gautam are on show in Jumeirah Lake Towers, a cluster of sleek skyscrapers with views of the waterfront. Popular addresses for financial firms, these are home to businesses belonging to the Adani Group as well as others to Vinod.

On the 36th floor of one tower is an office with three name plates outside: Emerging Market Investment DMCC, RVG Exim DMCC, and Adani Global Investment DMCC. A staff member said it was Vinod’s family office. On its website, Emerging Market Investment DMCC says Vinod is its promoter, the term used in India for founders and owners.

The three company names are also mentioned in the Hindenburg report as being among dozens of shell entities in offshore tax havens.

Emerging Market Investment DMCC has played prominently in the back-and-forth between the Adani Group and Hindenburg. Hindenburg said the Vinod firm lent US$1 billion to a subsidiary of a listed unit called Adani Power, and questioned the source of those funds.

The Adani Group said the allegation was “incorrect” and that the money was not lent. In reality, Emerging Market Investment DMCC acquired the unsustainable debt of a power business from lenders for US$100, the conglomerate said.

Shell companies “are part and parcel of the Indian investment scene”, said Dr Milan Vaishnav, director of the South Asia Programme at the Carnegie Endowment for International Peace.

“What caught people’s attention was the number of shell entities involved and the linkages to Gautam Adani’s brother,” Dr Vaishnav said about the Hindenburg report.

Vinod moved to Singapore briefly before relocating to Dubai, where he made his fortune in trading sugar, oil, aluminium, copper and iron scrap, media reports said. The billionaire is a follower of the Jain religion that emphasises vegetarianism and non-violence. BLOOMBERG