“SEBI’s current chairperson and her husband Dhaval Buch had hidden shares in the very same unknown offshore Bermuda and Mauritius funds in the same complex nested structure used by Vinod Adani,” Hindenburg said in a report posted on its website.
Dubai-based Vinod is the elder brother of Gautam Adani and is said to have used the above-mentioned entities to invest in the Indian market with funds allegedly diverted from over-invoicing for power facilities to the Adani Group.
The report, citing whistleblower documents, said the Books appear to have opened an account in Singapore for IPE Plus Fund 1 on June 5, 2015. The offshore Mauritius fund was allegedly set up by Adani directors through IIFL and is registered in the tax haven of Mauritius.
— HindenburgRes (@HindenburgRes)
“Apart from the allegations that it was used as a conduit for Vinod Adani’s funds, the small fund also had close ties to Adani. According to its biography, the founder and chief investment officer of IPE Plus Fund is Anil Ahuja. According to his biography and stock exchange disclosures, Ahuja was also a director of Adani Enterprises, where he served three terms over nine years until June 2017, and prior to that he was a director of Adani Power,” Hindenburg alleged. He said Adani’s confidence that it could continue its operations without the risk of serious regulatory intervention “can be explained by its relationship with SEBI chair Madhavi Bhu.” “What we were not aware of was that the current SEBI chair and her husband Dhaval Bhu had hidden holdings in the exact same obscure offshore Bermuda and Mauritius funds in the same complex nested structure that Vinod Adani used,” Hindenburg said.
The whistleblower alleged that a company controlled by Vinod Adani invested in the Global Dynamic Opportunities Fund (“GDOF”) in Bermuda, a British overseas territory and tax haven, which subsequently invested in IPE Plus Fund 1.
A separate investigation by the Financial Times found that GDOF’s parent fund was used by two Adani associates to “hold and trade significant amounts of Adani Group shares”.
Hindenburg said SEBI’s “reluctance to take meaningful action against the Adani Group’s questionable overseas shareholders could be due to the fact that Buch was using the very same funds that were used by Vinod Adani.”
The US-based short seller also submitted copies of Ministry of Corporate Affairs records which show that the Sebi chief owns 99% of the shares in Agora Advisory, a consulting firm in which her husband is a director.
“In 2022, the entity reported revenue of $261,000 from consulting, which is 4.4 times the salary disclosed to SEBI,” the report said, adding that it is unclear how much revenue the entity earns from its consulting business and from whom, as offshore Singapore entities are exempt from disclosing financial statements.
“Simply put, despite there being thousands of mainstream and reputable mutual fund products across India, an industry that she is currently responsible for regulating, the documents show that SEBI Chairperson Madhavi Buch and her husband, with extremely minimal assets, invested in multi-tiered offshore fund structures across known high-risk jurisdictions, overseen by companies with reported links to the Wirecard scandal, run by Adani directors and the same entities heavily used by Vinod Adani in the Adani cash diversion scandal,” the report said.
Pointing out that the Securities and Exchange Board of India has not taken any action against other suspect Adani shareholders — EM Resurgent Fund and Emerging India Focus Fund — run by India Infoline, he said, “If the Securities and Exchange Board of India really wants to find the offshore fund holders, its chairman should have started by looking inside himself. It is not surprising that the Securities and Exchange Board of India has been reluctant to pursue any trail that could lead to its own chairman.”
Referring to SEBI chief Dhaval Buch’s husband, Hindenburg said the regulator had approved the IPOs of Mindspace and Nexus Select Trust, two real estate investment trusts (REITs) backed by the PE firm, when Buch was a senior adviser to Blackstone.
“During Dhaval Buch’s tenure as advisor to Blackstone, SEBI has proposed, approved and facilitated key REIT regulatory changes, including seven consultation papers, three consolidation updates, two new regulatory frameworks and unit nomination rights, which will particularly benefit private equity firms like Blackstone,” Hindenburg said.
“At an industry conference, SEBI Chairman Madhavi Buch touted REITs as the ‘favourite product of the future’ and urged investors to view the asset class ‘positively.’ In these remarks, Buch failed to mention that Blackstone, to which her husband serves as an adviser, stands to gain significantly from the asset class,” the paper reported.
Agora Advisory, reportedly 99% owned by Madhavi Buch, earned Rs 19.8 crore in revenue from consulting, which is 4.4 times Madhavi Buch’s earlier declared salary as a full-time member of SEBI.
Citing the data, Hindenburg said regulator SEBI cannot be trusted to be an objective adjudicator in the Adani matter and that proceeds from the report would be donated to causes supporting freedom of expression.
ET has written to Sebi seeking its comment on the allegations and a response is awaited.
