hindenburg research report adani pdf

A U.S. short seller's fraud claims dethroned Asia's richest man. Here's what to know.

Gautam Adani rose from college dropout to become Asia’s richest man — but now he's seen his empire rocked by a week of turmoil.

The Indian tycoon has lost his title, and tens of billions in personal wealth, in a matter of days after a U.S.-based short-selling firm accused him of “the largest con in corporate history.”

Adani dismissed the allegations and accused the short-seller, Hindenburg, of a “calculated attack” on his country.

But the claims have triggered a meltdown for his company and sent shockwaves through the markets.

On Thursday, Adani abandoned his flagship company's planned stock offering as his conglomerate's losses topped $100 billion, deepening concerns about a potential broader impact on India's economy.

Here’s what to know.

What are the accusations?

Hindenburg Research published a report on Jan. 24 saying the Adani Group, one of India’s biggest conglomerates, had “engaged in a brazen stock manipulation and accounting fraud scheme over the course of decades.”

The report was published days before the planned $2.5 billion share sale by Adani Enterprises, the conglomerate’s flagship company. 

In addition to accounting fraud, Hindenburg also accused the Adani Group of being involved in billions of dollars’ worth of “suspicious dealings with its chairman’s brother, Vinod Adani, and his labyrinth of offshore shell entities,” which it says the company used for stock manipulation.

Hindenburg has a track record of exposing alleged corporate wrongdoing while placing bets against these companies, a process also known as short selling. Hindenburg disclosed that it held short positions in Adani’s companies through assets traded in the United States and non-Indian-traded derivative instruments, which experts said positioned it to benefit from a drop in share prices.

The report, which Hindenburg said was based on interviews with former executives and research from thousands of documents, raised concerns about high debt and the activities of top executives and concluded that seven of Adani’s companies were overvalued.

What has Adani said?

Adani's business hit back at Hindenburg, threatening legal action and accusing it of sabotaging the share sale.

“The volatility in Indian stock markets created by the report is of great concern and has led to unwanted anguish for Indian citizens,” the conglomerate said in a statement last week.

In another 413-page response a few days later, Adani dismissed Hindenburg’s accusations as baseless, calling the short-seller the “Madoffs of Manhattan.”

“This is not merely an unwarranted attack on any specific company but a calculated attack on India, the independence, integrity and quality of Indian institutions, and the growth story and ambition of India,” Adani’s statement said.

Hindenburg replied that only about 30 of those pages addressed issues raised in its report, and that Adani had not answered 62 of its 88 questions.

“India’s future is being held back by the Adani Group, which has draped itself in the Indian flag while systematically looting the nation,” the research group said. “We also believe that fraud is fraud, even when it’s perpetrated by one of the wealthiest individuals in the world.”

Hindenburg Research and the Adani Group did not respond to a request for additional comment.

How bad has the damage been?

Though Adani denied the allegations, the report resulted in a mass selloff of shares in the Adani Group’s listed companies, which according to Bloomberg have lost $107 billion in value.

Adani himself has lost $48.5 billion of his $120 billion fortune, according to the Bloomberg Billionaires Index , where he has fallen from third on the list to 13th. He has also slipped one spot below his rival and fellow Indian tycoon Mukesh Ambani, the chairman of Reliance Industries.

The record domestic share sale had been seen as a measure of market confidence in Adani after the report, and it initially had enough investor support to proceed on Tuesday. But the conglomerate called it off late Wednesday, citing “market volatility.”

“This decision will not have any impact on our existing operations as well as our future plans,” Adani said in a recorded video address aiming to calm investors that was released Thursday, his first public comments since the crisis began.

Adani said the decision to scrap the share offering was made “to insulate the investors from potential losses.”

“For me, the interest of my investors is paramount and everything else is secondary,” he said.

“We will continue to focus on timely executions and delivery of projects,” he said.

But the damage may have been done. Since Hindenburg's report was released on Jan. 24, Adani Group companies have lost nearly half their combined market value.

“Unless Adani is able to regain the confidence of institutional investors, stocks will be in freefall,” Avinash Gorakshakar, head of research at Mumbai-based Profitmart Securities, told Reuters.

Who is Gautam Adani?

Adani, 60, is from the western Indian state of Gujarat and built his empire from the ground up.

After dropping out of college, he became a diamond trader in Mumbai, the country’s financial capital, before going into commodities trading with his newly established Adani Enterprises in the 1990s.

Today, Adani is a household name in India and his empire spans almost every public sector — a fact that has meant Adani’s plummeting stocks have raised concerns about the potential for a wider impact on India’s financial system.

While the country isn’t solely reliant on the giant, “they are playing, like many others, a very important role in India’s infrastructure growth and infrastructure deployment,” Arvind Gupta, co-founder of the Digital India Foundation, a nonprofit think tank, told NBC News.

Adani's companies build ports, generate electricity, mine coal, run airports and manufacture defense equipment, among other things. Adani has also pledged to invest up to $70 billion in green energy projects.

As his companies’ share prices surged in recent years, Adani’s net worth has gone up about 2,000%.

Adani denies accusations that he has benefited from his close ties with Prime Minister Narendra Modi , who is also from Gujarat and has been known to use an Adani corporate jet for campaigning.

Late last year, Adani acquired a majority stake in NDTV, one of India’s last major independent television broadcasters and one that was critical of Modi. Several prominent journalists quit in the wake of the takeover.

India’s government has denied allegations of favoring Adani.

Mithil Aggarwal is a Hong Kong-based reporter/producer for NBC News.

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What does the Adani Group's crash mean for India's economy?

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A security staff walks past the logo of Reserve Bank of India (RBI) at the RBI headquarters in Mumbai on August 7, 2019. (Photo by Indranil MUKHERJEE / AFP)(Photo by INDRANIL MUKHERJEE/AFP via Getty Images) INDRANIL MUKHERJEE/AFP via Getty Images hide caption

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Gautam Adani was recently one of the top ten richest people in the world. But, after a scathing report came out last month alleging him and his companies of wide-scale fraud, market manipulation and corruption, he has lost billions, and is no longer the richest person in Asia - or India.

What can this report from American firm Hindenburg Research and the events of the past two weeks tell us about the Indian business and financial environment?

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The Hindenburg Report on Adani—A Case to Revisit Minimum Public Shareholding Requirements

Arjya Majumdar Professor at the O. P. Jindal Global University

Yash Gupta Student at O. P. Jindal Global University

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On 24 January 2023, a forensic financial research group by the name of Hindenburg Research released a report based on two years of investigation into the workings of the Adani group, a large Indian ports to edible oils conglomerate. This report makes a number of allegations of accounting fraud and share price manipulation.

One of the allegations levied on the Adani group involves their public shareholding being dangerously close to the minimum levels required. In order to understand this allegation and what it may mean for the Adani group and the entire Indian securities market, it may be helpful to analyze the evolution of the minimum public shareholding requirement in India.

Evolution of the Minimum Public Shareholding Requirement

Prior to 2010, the Indian Securities Contracts Regulations Rules required all listed companies to maintain at least 10% of their post-issue paid-up share capital in public hands. In 2010, the Securities and Exchange Board of India (‘SEBI’) increased this to 25%. Companies were given a maximum of three years to comply with this requirement. Additionally, there was an exception for large companies having a post-issue capital in excess of INR 40 billion. Such companies would be permitted to list 10% of their shares with a requirement to increase their public shareholding to 25% in the three years following the listing.

The next major amendment took place in 2014 which pegged the minimum public shareholding to the post-issue share capital as follows:

• For companies having a post-issue capital of less than INR 16 billion – 25%;
• For companies having a post-issue capital between INR 16 billion and INR 40 billion – such number of shares that would amount to INR 4 billion at the offer price;

3. For companies having a post-issue capital in excess of INR 40 billion – 10%.

Any company listed with less than 25% would be required to gradually increase its public shareholding to 25% within a period of three years, in accordance with the 2010 amendment. In 2021 the public shareholding requirement was reduced to 5% for companies having a post-issue share capital in excess of INR 10 trillion in light of the listing of the Indian insurance behemoth, the Life Insurance Corporation of India .

Thus, the present position on minimum public shareholding incorporates a graded approach, based on company size. In addition, all listed companies must gradually increase their minimum public shareholding until they achieve the 25% mark.

Rationale of the 25% public shareholding requirement

Indian law requires that certain shareholder decisions that are of vital importance to companies be taken only if they receive the support of at least 75% of the votes cast at a shareholders’ meeting, otherwise known as a special resolution. Special resolutions are required for further issue of capital and changes in the name, registered address and in the constitutional documents of the company, amongst others. Ostensibly, the rationale behind requiring a minimum of 25% of the post-issue capital in public hands is to ensure that there is some support for special resolutions outside of the controlling shareholder (referred to in India as a ‘promoter’). However, as the Hindenburg report suggests, there are workarounds to ensure that even if the minimum public shareholding requirement is met, promoters may still be able to pass a special resolution without public support.

Allegations in the Hindenburg Report

One of the many allegations in the Hindenburg report suggests that there is considerable opacity in certain public shareholders of Adani companies, particularly funds based in Mauritius. The report suggests that these funds, while shown as representing public shareholding, are actually owned and controlled by the Adani group and, therefore, ought to be classified as promoter shareholders as opposed to public shareholders. They suggest that by using such funds, which have the entirety of their assets invested in Adani companies, Adani promoters are able to manipulate share prices as well as retain a controlling stake in excess of 75% in their companies. This is financially viable only if the promoter's shareholding in such listed companies is close to 75%.

In its response dated 29 January 2023 , the Adani group has categorically denied any connection with the offshore funds alluded to in the Hindenburg report, specifically stating that, as publicly listed companies, they have no control over who buys, sells or otherwise owns their publicly traded shares.

However, our initial research suggests that it is not unusual to see listed companies having close to 75% shareholding held by promoters.

An Analysis of Promoter Shareholdings in the NIFTY 500

Based on publicly available data , w e analyzed the top 500 companies on the National Stock Exchange (‘NSE’) by market capitalization, seeking to understand the shareholding breakup by promoter and non-promoter groups.

While the average promoter shareholding in Indian companies is around the 50% mark, 97 out of the top 500 listed companies on the NSE have a promoter shareholding between 70% and 75%. This high level of promoter shareholding, as brought to light in the Hindenburg report, clearly extends beyond the Adani conglomerate.

While a promoter shareholding between 70% and 75% is entirely within SEBI requirements, it is theoretically possible that nearly one-fifth of companies listed on the NSE are susceptible to excess promoter control through promoter-owned public shareholders.

The Case for 35%

In her maiden Budget Speech in 2019 , India’s current Finance Minister had suggested increasing the minimum public shareholding requirement from 25% to 35%. This change would have the dual effect of increasing liquidity in Indian capital markets as well as making it more difficult for promoters to exert excessive influence over listed companies. Indian promoters would find it more difficult to hold in excess of 10% through public shareholders as compared to the 2-3% alleged by Hindenburg. However, SEBI itself was not in favor of this move. Other experts suggested that Indian markets may not be able to absorb the increase in public float, eventually defeating the purpose of better price discovery .

However, if the allegations in the Hindenburg report, specifically those relating to high promoter shareholding and connected offshore funds are found to be true, this may create an opportunity for Indian lawmakers to reconsider an increase in the public shareholding requirements from 25% to 35%. Liquidity concerns may be offset by the burgeoning participation of retail investors , both directly as well as through mutual funds. At the same time, a gradual increase in public shareholding as seen between 2010 and 2014 would eventually lead to better transparency and accountability in Indian listed companies, thus driving more participation of retail foreign portfolio investors.

Arjya B. Majumdar is Professor and Dean, Centre for Global Corporate and Financial Law and Policy, O. P. Jindal Global University.

Yash Gupta is a law student at O. P. Jindal Global University.

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Whistleblower Documents Reveal SEBI’s Chairperson Had Stake In Obscure Offshore Entities Used In Adani Money Siphoning Scandal

Get our latest reports delivered to your inbox, background: 18 months since our adani report, sebi has shown a surprising lack of interest in adani’s alleged undisclosed web of mauritius and offshore shell entities.

It has been nearly 18 months since our original report on the Adani Group presented overwhelming evidence that the Indian conglomerate was operating “the largest con in corporate history”. Our report exposed a web of offshore, primarily Mauritius-based shell entities used for suspected billions of dollars of undisclosed related party transactions, undisclosed investment and stock manipulation.

Since then, despite the evidence, along with over 40 independent media investigations corroborating and expanding on our original work, Indian securities regulator SEBI has taken no public action against the Adani Group. [1] Media has  reported  that SEBI is likely to impose mere token, technical violations on the Adani Group despite the breadth and magnitude of the issues.

Instead, on June 27 th , 2024, SEBI sent us an apparent ‘show cause’ notice. SEBI did not allege any factual errors in our 106-page analysis, but instead claimed the disclosure around our short position– which we disclosed repeatedly– was deficient, arguing that we should have provided even more robust disclosure. [ 1 , 2 ]

The SEBI notice also claimed our report was “reckless” for quoting a banned broker with specific experience dealing with SEBI who detailed how the regulator was fully aware that firms like Adani used complex offshore entities to flout rules, and that the regulator participated in the schemes.

In our July 2024 response to the ‘show cause’ notice, we wrote that we found it odd how SEBI—a regulator specifically set up to prevent fraudulent practices – showed little interest in meaningfully pursuing the parties that ran a secret offshore shell empire engaging in billions of dollars of undisclosed related party transactions through public companies while propping up its stocks through a network of sham investment entities.

The Indian Supreme Court said that SEBI had drawn a blank in its investigation of these shareholders, as detailed in the court records. In late June 2024, Adani CFO Jugeshinder Singh described some regulator notices aimed towards Adani Group as “trivial”, apparently writing off the prospect of their severity even before the process was concluded.

Background: “IPE Plus Fund” Is A Small Offshore Mauritius Fund Set Up By An Adani Director Through India Infoline (IIFL), A Wealth Management Firm With Ties To The Wirecard Scandal Vinod Adani – Brother Of Gautam Adani – Used This Structure To Invest In Indian Markets With Funds Allegedly Siphoned From Over Invoicing Of Power Equipment To The Adani Group

As detailed in our original Adani report , documents from the Directorate of Revenue Intelligence (DRI) alleged that Adani “grossly” overvalued the import valuation of key power equipment, using offshore shell entities to siphon and launder money from the Indian public. [ 1 ]

A subsequent investigation by non-profit project Adani Watch in December 2023 showed how a web of offshore entities, controlled by Gautam Adani’s brother, Vinod Adani, were recipients of funds from the alleged over-invoicing of power equipment.

In one complex structure, a Vinod Adani controlled company had invested in “Global Dynamic Opportunities Fund” (“GDOF”) in Bermuda, a British overseas territory and tax haven, which then invested in IPE Plus Fund 1, a fund registered in Mauritius, another tax haven .

A separate investigation by the Financial Times showed that the parent fund of GDOF – the Bermuda-based Global Opportunities Fund (“GOF”) – was used by two Adani associates “to amass and trade large positions in shares of the Adani Group”. These nested funds are managed by Indian Infoline (“IIFL”), now called 360 One per private fund data and IIFL’s marketing material. [ 1 , 2 ] IIFL, is a publicly listed wealth management firm in India which has a long history in setting up convoluted fund structures and with previous ties to the Wirecard scandal , Germany’s largest ever fraud case . [2] IIFL Wealth was alleged to have committed fraud in a takeover deal involving Wirecard, using a Mauritius fund structure, per a lawsuit in UK courts.

Sitting below GDOF in the multi-layer structure (two layers below the Global Opportunities Fund), is the IPE Plus fund, a small and obscure offshore fund registered in Mauritius. The IPE Plus Fund had only U.S. $38.43 million in assets under management (AUM) at the end of December 2017, per IIFL disclosures .

AdaniWatch reported that “by March 2017, ATIL, a Vinod Adani company, had a total balance of $40.38 million with GDOF”. Thus, while we are unable to see the total assets of parent fund GDOF, it appears a significant portion of the assets of the funds may be comprised of Adani money.

Beyond being used as an alleged funnel for Vinod Adani’s money, the tiny fund had other close ties to Adani. The Founder and Chief Investment Officer (CIO) of the IPE Plus Fund was Anil Ahuja, per his biography . At the same time, Ahuja was a director of Adani Enterprises where he served three terms spanning nine years ending in June 2017, per his biography and exchange disclosures .  Prior to that he was a director of Adani Power .  [ Pg. 5 ]

Whistleblower Documents Show That Madhabi Buch, The Current Chairperson Of SEBI, And Her Husband Had Stakes In Both Obscure Offshore Funds Used In The Adani Money Siphoning Scandal

We had previously noted Adani’s total confidence in continuing to operate without the risk of serious regulatory intervention, suggesting that this may be explained through Adani’s relationship with SEBI Chairperson, Madhabi Buch.

What we hadn’t realized: the current SEBI Chairperson and her husband, Dhaval Buch, had hidden stakes in the exact same obscure offshore Bermuda and Mauritius funds, found in the same complex nested structure, used by Vinod Adani. [3] Madhabi Buch and her husband Dhaval Buch first appear to have opened their account with IPE Plus Fund 1 on June 5 th , 2015 in Singapore, per whistleblower documents.

A declaration of funds, signed by a principal at IIFL states that the source of the investment is “salary” and the couple´s net worth is estimated at $10 million.  

Madhabi Buch was appointed a “Whole Time Member” of SEBI in April 2017, according to her LinkedIn profile.

On March 22 nd , 2017, just weeks ahead of that politically sensitive appointment, Madhabi’s husband, Dhaval Buch, wrote to Mauritius fund administrator Trident Trust, according to documents we received from a whistleblower. The email was regarding his and his wife’s investment in the Global Dynamic Opportunities Fund (“ GDOF ”).

In the letter, Dhaval Buch requested to “be the sole person authorised to operate the Accounts”, seemingly moving the assets out of his wife’s name ahead of the politically sensitive appointment.

In a later account statement dated February 26 th , 2018, addressed to Madhabi Buch’s private email, the full details of the structure are revealed: “GDOF Cell 90 (IPEplus Fund 1)”. Again, this is the exact same Mauritius-registered “cell” of the fund, found several layers deep in a convoluted structure, reportedly used by Vinod Adani. [4]

The total value of Buch’s stake was worth U.S. $872,762.25 at the time.

Later, on February 25 th , 2018, during Buch’s tenure as a Whole-Time Member of SEBI , whistleblower documents show she personally wrote to India Infoline using her private Gmail account, doing business through her husband’s name, to redeem the units in the fund.

In brief, despite the existence of thousands of mainstream, reputable onshore Indian mutual fund products, an industr y she now is responsible for regulating, documents show SEBI Chairperson Madhabi Buch and her husband had stakes in a multi-layered offshore fund structure with miniscule assets, traversing known high-risk jurisdictions, overseen by a company with reported ties to the Wirecard scandal, in the same entity run by an Adani director and significantly used by Vinod Adani in the alleged Adani cash siphoning scandal.

The Supreme Court Said That SEBI Had “Drawn A Blank” In Its Investigations Into Who Funded Adani’s Offshore Shareholders

If sebi really wanted to find the offshore fund holders, perhaps the sebi chairperson could have started by looking in the mirror, we find it unsurprising that sebi was reluctant to follow a trail that may have led to its own chairperson.

In response to requests from the Indian Supreme Court to investigate the Adani matter, SEBI was said to have a hit a wall unveiling the holders of the offshore funds. The Supreme Court said that while SEBI seemingly agreed with our concerns over who funded Adani’s offshore shareholders, “it is evident that SEBI has drawn a blank in this investigation”.

We suspect SEBI’s unwillingness to take meaningful action against suspect offshore shareholders in the Adani Group may stem from Chairperson Madhabi Buch’s complicity in using the exact same funds used by Vinod Adani, brother of Gautam Adani.

To Date, SEBI Has Taken No Action Against Other Suspect Adani Shareholders Operated By India Infoline: EM Resurgent Fund and Emerging India Focus Funds

In our original report , we identified, among other funds, two Mauritius entities called EM Resurgent Fund and Emerging India Focus Funds. Both entities were disclosed as related parties of India Infoline (now called 360 One) and overseen by its employees, per its annual reports. [5] [ Pg. 34 ]

We noted that the “the trading patterns [of these funds] suggest that the stock parking entities and the suspicious offshore entities may have artificially inflated the volume and/or price of some Adani listed companies.”

Our concerns were further corroborated by an investigation by the Financial Times , which found a “secret paper trail” at EM Resurgent and Emerging India Focus Funds. The investigation raised questions whether Adani used business associates as “front men” to “bypass rules for Indian companies that prevent share price manipulation.” To date, SEBI has taken no action against these funds.

From April 2017 To March 2022, While Madhabi Buch Was A Whole Time Member And Chairperson At SEBI, She Had A 100% Interest In An Offshore Singaporean Consulting Firm, Called Agora Partners On March 16 th , 2022, Two Weeks After Her Appointment As SEBI Chairperson, She Quietly Transferred The Shares To Her Husband

On March 27 th , 2013, Agora Partners Pte Ltd was registered in Singapore. It describes itself as a “business and management consultancy”, per a Singapore director search . [ Pgs. 1-3 ] At the time, Madhabi Buch was disclosed as a 100% shareholder, according to the company’s 2014 annual return . [Pgs. 1 -3]

In April 2017, Madhabi Buch joined SEBI as a whole time member , per her Linkedin , and became Chairperson at SEBI on March 1 st , 2022. Buch remained a 100% shareholder of Agora Partners until March 16 th , 2022, per Singaporean records.

Likely realizing the political sensitivity of such a conflict of interest, were it ever revealed, she transferred her stake in Agora Partners to her husband, Dhaval Buch per Singaporean share transfer details .

This offshore Singaporean entity is exempt from disclosing financial statements so it is unclear the amount of revenue it derives from its consulting business and from whom – crucial information for those assessing the probity of the Chairperson’s external businesses interests. [6]

This is especially important given the direct email evidence presented earlier showing SEBI’s Chairperson, Madhabi Buch, having done business via private email through her husband’s name in offshore fund entities.

During Madhabi Buch’s Tenure As A Whole Time Member At SEBI, Her Husband Was Appointed As A Senior Advisor To Blackstone In 2019

He had not worked for a fund, in real estate or capital markets before, per his linkedin profile.

Dhaval Buch, the husband of SEBI Chairperson Madhabi Buch, describes himself as having “deep experience in procurement and all aspects of the supply chain”, per his Linkedin . He spent most of his time at consumer company Unilever, rising to become Chief Procurement Officer, according to his Linkedin .

The same source shows that over the past two decades, he had never worked for a fund, in real estate or at a capital markets firm. Despite the lack of experience in these areas, he joined Blackstone , a global private equity firm and large investor in India, as a “Senior Advisor” in July 2019, per his Linkedin .

Blackstone Has Been One Of The Largest Investors And Sponsors Of REITS, A Nascent Asset Class In India During Dhaval Buch’s Time As Senior Advisor, While His Wife Was A SEBI Official, Blackstone Sponsored Mindspace and Nexus Select Trust, India’s Second and Fourth REIT To Receive SEBI Approval To Publicly IPO

Blackstone has been one of the largest investors and sponsors of REITs, a nascent asset class in India.

India’s first ever REIT, Embassy , obtained SEBI approval and IPO’ed on April 1 st , 2019, sponsored by Blackstone , just 3 months before Dhaval Buch reported joining Blackstone in July 2019. 13 months later, in August 2020, Mindspace REIT, backed by Blackstone, became India’s second REIT to IPO , after SEBI approval.

Blackstone now sponsors Nexus Select Trust, described as India’s largest retail platform of assets, by ICICI Research , which listed in May, 2023 and became India’s fourth publicly traded REIT. Blackstone has multiple other interests across retail estate.

During Dhaval Buch’s Time As Advisor To Blackstone, SEBI Has Proposed, Approved And Facilitated Major REIT Regulations Changes

These include 7 consultation papers, 3 consolidated updates, 2 new regulatory frameworks and nomination rights for units, specifically benefiting private equity firms like blackstone.

Since Madhabi Buch became Chairperson in March 2022, SEBI has proposed and implemented a raft of REIT legislation, of significant benefit to Blackstone as one of the largest REIT sponsors in India, whom her husband works for. This has included, among other more procedural updates:

• 7 consultation papers on REITS, [ 1 , 2 , 3 , 4 , 5 , 6 , 7 ]
• 3 consolidated updates to the “Master Circular” on REITs & 1 amendment. [ 1 , 2 , 3 ]
• A new regulatory framework for “Micro, small & medium REITs” [ 1 ]
• A new regulatory framework for “offer for sale” of REITs [ 1 ]
• New board nomination rights, allowing unit holders like Blackstone to nominate directors. [ 1 ]

During this time, Blackstone cashed out its entire stake in Embassy REIT, in December 2023 valued at circa INR 71 billion (U.S. $853 million at the time), in India’s largest block trade of the year, per media reports .

During Industry Conferences, SEBI Chairperson Madhabi Buch Has Touted REITs As Her “Favourite Products For The Future” And Urged Investors To Look “Positively” Upon The Asset Class

While making those statements, she omitted to mention that blackstone, who her husband advises, stands to gain significantly from the asset class.

Perhaps the biggest champion of REITs in India is SEBI Chairperson Madhabi Buch, who has promoted the asset class at various conferences.

On March 20 th , 2023, she said REITs are among her “ favourite products for the future” at a News18 Rising Bharat Summit.

At a SEBI-NISM research conference a year later, in March 2024, she urged investors to have a “positive” view on REITs, per media reports .

On April 2 nd , 2024, at the CII Corporate Governance Summit , the Chairperson predicted enormous growth in REITs, suggesting it would become as large as India’s GDP along with InvITs (infrastructure investment trusts) and municipal bonds:

“[REITS, InvITs and municipal bonds] can be in value equal to our entire market the way it is valued today, in others words one time GDP” [ 1:15 ]

While making these statements, she failed to disclose the obvious beneficiary of these regulations: the fund her husband advises, Blackstone. [7]

Madhabi Buch Currently Has A 99% Stake In An Indian Consulting Business Called Agora Advisory, Where Her Husband Is A Director

In 2022, this entity reported $261,000 revenue from consulting, 4.4 times her disclosed salary at sebi.

Agora Advisory Private Limited was set up in India on May 7 th , 2013, per its certificate of incorporation . It discloses consultancy as its main business activity. [ Pg. 2 ] To date, Madhabi Buch remains a 99% owner of the business with her husband, Dhaval Buch as a director, per its shareholding list and corporate records .

Unlike the opaque Singaporean consulting entity, we have more visibility into the Indian entity. At the end of financial year 2022, Agora Advisory (99% owned by Madhabi Buch), generated INR 19.8 million (U.S. $261,000) revenue from consulting, per its annual report. [ Pg. 6 ] This was 4.4 times Madhabi Buch’s previous disclosed salary as a Whole-Time member at SEBI.

Conclusion: Conflict Or Capture? Either Way, We Do Not Think SEBI Can Be Trusted As An Objective Arbiter In The Adani Matter

We think our findings raise questions that merit further investigation. We welcome additional transparency.

To the extent that any proceeds are derived from this report they will be donated to causes that support free expression.

Legal Disclaimer

This report does not constitute a recommendation on securities. This report represents our opinion and investigative commentary and we encourage every reader to do their own due diligence.  Use of Hindenburg Research’s research is at your own risk. In no event should Hindenburg Research or any affiliated party be liable for any direct or indirect trading losses caused by any information in this report. You further agree to do your own research and due diligence, consult your own financial, legal, and tax advisors before making any investment decision with respect to transacting in any securities covered herein. You should assume that as of the publication date of any short-biased report or letter, Hindenburg Research (possibly along with or through our members, partners, affiliates, employees, and/or consultants) along with our clients and/or investors has a short position in all stocks or bonds (and/or derivatives of the stock) covered herein, or reference securities such as related ETFs or mutual funds and therefore stands to realize significant gains in the event that the price of any security covered herein declines. Following publication of any report or letter, we intend to continue transacting in the securities covered herein, and we may be long, short, or neutral at any time hereafter regardless of our initial conclusions, or opinions. This is not an offer to sell or a solicitation of an offer to buy any security, nor shall any security be offered or sold to any person, in any jurisdiction in which such offer would be unlawful under the securities laws of such jurisdiction. Hindenburg Research is not registered as an investment advisor in the United States or have similar registration in any other jurisdiction. To the best of our ability and belief, all information contained herein is accurate and reliable, and has been obtained from public sources we believe to be accurate and reliable, and who are not insiders or connected persons of the stock covered herein or who may otherwise owe any fiduciary duty or duty of confidentiality to the issuer. However, such information is presented “as is,” without warranty of any kind – whether express or implied. Hindenburg Research makes no representation, express or implied, as to the accuracy, timeliness, or completeness of any such information or with regard to the results to be obtained from its use. All expressions of opinion are subject to change without notice, and Hindenburg Research does not undertake to update or supplement this report or any of the information contained herein.

[1] To date, we have seen no public orders on the SEBI website against the Adani Group.

[2] IIFL’s subsidiary filings in Mauritius detail many investment management structures going back over a decade. [ Pg. 29 ] Some of these funds have been described by media as “ opaque ” and “ Russian doll ”-like.

[3] Both these countries are designated high risk country by global custodians, operating in India, who reportedly drew up a list at the behest of SEBI, per the Economic Times .

[4] Cells can be thought of as a “sleeve” of the company to hold specific assets distinct from others.

[5] EM Resurgent shared common directors Rohit Kumar and Maharoof Parokkot, per IIFL’s subsidiary filings and the Mauritius corporate registry . Emerging India Focus Fund also lists Amit Garg as a director, per the Mauritius registry .  He is also a current director in IIFL’s subsidiaries .

[6] It is noted that politicians in India, for example, must file Affidavits disclosing their assets.

[7] Incidentally, one party that has benefitted from Blackstone’s foray into Indian real estate is Adani. In May 2024, it was reported that Blackstone, was “all set to buy” Adani’s BKC Office space in, in a deal worth INR 18-20 billion (U.S. $215 million to $240 million). This is part of Adani’s ongoing efforts to monetize real estate assets .

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‘Personal exigency’: Parliament panel meet adjourned as Sebi chief Madhabi Buch skips it

There has been a chorus in the Opposition for a parliamentary probe into Hindenburg Research’s allegation that Buch and her husband, Dhaval Buch, had “stake in obscure offshore entities used in Adani money siphoning scandal”.

A crucial meeting of the Public Accounts Committee (PAC) on Thursday was adjourned as Securities and Exchange Board of India (SEBI) chairperson Madhabi Puri Buch informed the panel, just hours before it was scheduled to start, that she would not be able to attend it due to a “personal exigency.”

PAC Chairman K C Venugopal said the committee decided to postpone today’s meeting after a communication from SEBI expressing Buch’s inability to attend the meeting. Venugopal also said that Buch had earlier sought an exception from appearing before the PAC, but was denied.

“The SEBI chairperson had sought an exception from appearing before the committee which we denied. After that, she has confirmed her and her officials’ presence in the committee. But today morning, at 9.30 am, we got a communication from the SEBI chairperson and other members that because of a personal exigency, she is not able to travel to Delhi. Considering it a request from a woman officer, we thought it would be better to postpone today’s meeting to another day,” Venugopal told reporters outside Parliament House Annexe.

“In the first meeting of the committee, we had decided that there would be review of the regulatory bodies, suo moto, as an agenda. So, we summoned the officials of SEBI for a review of its performance. We had sent the notices to the concerned people,” he added.

The panel was to question Buch and other officials over the regulator’s performance in the backdrop of charges levelled against the Sebi chief by US-based Hindenburg Research.

In its agenda for the Thursday meeting, the PAC had two items: “Briefing by Audit followed by Oral evidence of the representatives of Ministry of Finance (Department of Economic Affairs) and Securities and Exchange Board of India (SEBI) on the subject, “Performance Review of Regulatory Bodies established by Act of Parliament”. II. Oral evidence of the representatives of the Ministry of Communications, Department of Telecommunications and Telecom Regulatory Authority of India on the subject, “Performance Review of Regulatory Bodies established by Act of Parliament”

According to sources, Buch, along with 3-4 senior officials, were expected to appear before the PAC. It is learnt that SEBI had earlier written to the committee asking if the regulatory body could be represented by officials and whether it was necessary for the chairperson to be present. The panel, however, insisted that the chairperson should attend the meeting.

The panel is expected to review the performance of regulatory board. The Opposition MPs were, however, planning to question SEBI on the allegations against Buch.

The MPs have been looking into instances where Buch had recused herself over the alleged conflict of interest and also whether she has done the same in the investigations over the charges against the Adani Group of companies.

There are likely to be questions on the status of pending investigation against offshore entities allegedly linked to the Adani Group also.

Sources in the ruling BJP said its members, too, are preparing questions over the ongoing investigation.

The ruling BJP MPs had, however, sought Speaker Om Birla ’s intervention against PAC Chairman K C Venugopal’s move to summon Buch before the panel. The BJP MPs claimed that the PAC’s move to announce an inquiry against SEBI is in violation of its rules.

Senior BJP MP Nishikant Dubey had argued that the functions of the PAC, as per the Rules of Procedure and Conduct of Business in Lok Sabha, m the “sole function of the PAC is confined to scrutinising the Appropriation Accounts of the government of India and the CAG reports”.

Have been in journalism covering national politics for 23 years. Have covered six consecutive Lok Sabha elections and assembly polls in almost all the states. Currently writes on ruling BJP. Always loves to understand what's cooking in the national politics (And ventures into the act only in kitchen at home).  ... Read More

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