India regulator clears Adani of some allegations made by short-seller Hindenburg

MUMBAI - Shares of Adani Enterprises rallied after India’s securities market regulator cleared the group’s billionaire founder Gautam Adani of some allegations of impropriety raised by US short-seller Hindenburg Research in early 2023.

The flagship company’s stock climbed as much as 5.2 per cent on Sept 19 after the Securities and Exchange Board of India (Sebi) said the evening before that there was no evidence of the Indian conglomerate using so-called related party transactions to route funds into its listed units in two orders on its website. Adani Group has repeatedly denied the accusations first made by Hindenburg, which has since disbanded.

Shares of all 10 firms controlled by the group gained, led by Adani Total Gas, which jumped more than 13 per cent.

While the regulator’s orders do not clear the ports-to-power conglomerate of other allegations raised by the short-seller, they still mark a reprieve for Adani’s empire and validate its stance of not being in violation of local laws.

Mr Adani himself, Asia’s second-richest person, continues to face a regulatory overhang from an indictment by the US Department of Justice in 2024 in an alleged US$250 million (S$320 million) bribery scheme.

Sebi’s investigation was related to Hindenburg’s allegations that Adicorp Enterprises, Milestone Tradelinks and Rehvar Infrastructure were used as a conduit to route funds from various Adani Group companies to fund publicly listed Adani Power and Adani Enterprises.

Sebi said in the two orders that there was no violation of its disclosure norms as the transactions between Adicorp, Milestone Tradelinks and Rehvar Infrastructure with the conglomerate’s firms did not meet the definition of a related party.

The scathing short-seller report in January 2023 had alleged large-scale corporate fraud and stock price manipulation, triggering a stock rout that at one point eroded over US$150 billion market value for the listed Adani entities and led to a court-directed local regulatory probe. It also halted Adani’s debt-fuelled expansion spree.

The conglomerate, which often aligns itself with Prime Minister Narendra Modi’s development goals and controls vast swathes of India’s infrastructure sector, is yet to fully recover from the market value erosion caused by the short-seller’s accusations.

The group’s market capitalisation was more than US$150 billion on Sept 18, compared with US$235 billion on the eve of Hindenburg’s report.

The Supreme Court of India said in January 2024 that no further probes into this were needed after Sebi closed its investigation.

Mr Adani now faces the biggest risk from the US probe, where his efforts to get those fraud charges against him resolved have stalled in recent months, Bloomberg News reported earlier in September, citing people familiar with the matter. BLOOMBERG