Emerging India Focus Funds (EIFF), a Mauritius-based foreign portfolio investor (FPI) that Sebi alleges is linked to Vinod Adani, the older half-brother of Gautam Adani, last week proposed a settlement amount of ₹28 lakh, according to documents reviewed by ET.
Additionally, group flagship Adani Enterprises (AEL) director Vinay Prakash and Ambuja Cements director Ameet Desai (whose role in his capacity as an AEL director in 2014 is the subject of the present matter) have each offered ₹3 lakh as settlement amount.
Adani Enterprises has also sought to settle the case. These settlement proposals were submitted in response to a September 27 show cause notice issued by the regulatory body. Settlement applications do not amount to an admission or denial of guilt.
While ET is aware of applications by four entities, it’s possible that all Adani entities involved have filed for settlement, since legal strategy tends to be formed at a group level.
“Sebi is yet to take a view on the settlement applications,” according to one person close to the development.
Apart from these four entities, the regulatory body issued show cause notices to 26 other entities, including Gautam Adani, his brothers Vinod, Rajesh and Vasant, nephew Pranav (Vinod’s son) and brother-in-law Pranav Vora.
Another person close to developments, who asked not to be named, said group entities are contesting the charges and the settlement application is only procedural.
“Filing a settlement application is the normal course of process for any corporate that has been served a show cause notice because if you don’t file within 60 days, you forfeit your right for settlement,” the person said.
“Group entities have also separately filed a response to the show cause notice, contesting the charges and requesting inspection of the documents on which the charges are based. The settlement application is only a precautionary measure by way of abundant caution. This is without admitting or denying the charges and to buy peace,” the person added
The notices questioned why the entities should not face action, including possible securities market debarment, for the alleged violations.
The four listed companies under scrutiny are Adani Enterprises, Adani Power, Adani Ports and Special Economic Zone, and Adani Energy Solutions (formerly Adani Transmission).
These, in their second quarterly results of FY25, acknowledged receiving show cause notices about wrongful classification of promoter shareholding as public shareholding.
Sebi has also sought to recover wrongful gains exceeding ₹2,500 crore, allegedly accumulated by Vinod Adani and his affiliated entities through establishing intricate structures for acquiring shares in the four companies.
Other recipients of the show cause notice include Gautam Adani’s childhood friend and Adani Wilmar director Malay Mahadevia; Adani Green Energy managing director Vneet Jaain, who was recently charged by the United States for allegedly committing securities and wire fraud; and Dharmesh Parikh, auditor of several Adani Group companies and the “personal chartered accountant of the promoters,” according to the notice.
Gautam Adani, Prakash, Desai, Mahadevia, and Jaain, along with nine additional Adani Group directors, have been accused of not adhering to the mandatory public shareholding norms in the companies on whose boards they serve, the Sebi notice read.
A spokesperson for EIFF said, “Unfortunately, we won’t be able to comment,” directing ET to contact the four listed Adani companies.
Emails sent to Adani Group companies, including its promoters and directors, foreign entities and foreign nationals linked to the Adani case, didn’t elicit any response till press time. Sebi too did not respond to ET’s queries.
Investigation Backdrop
The case dates back to June-July 2020, when Sebi received complaints regarding non-compliance with minimum public shareholding requirements by Adani Group companies.
Rules mandate a listed company must maintain public shareholding of at least 25%. This is meant to ensure that a meaningful part of a company’s equity is publicly traded, and there’s adequate liquidity in the trading of shares.
Sebi launched a formal inquiry on October 23, 2020, examining transactions from September 1, 2012, to September 30, 2020.
According to the show cause notice, the investigation uncovered a scheme involving two FPIs-EIFF and EM Resurgent Fund (EMR)-and a foreign investor, Opal Investments, whose shareholdings were connected to Adani Group promoters, specifically Vinod Adani.
They had acquired shares of the four listed Adani companies to present apparent compliance with public shareholding requirements.
Shares of Adani Enterprises were acquired during its offer-for-sale (OFS), while shares of Adani Ports were purchased during its institutional placement programme (IPP), and shares of Adani Power were gained through a merger. The three foreign investors also purchased shares of Adani Energy Solutions.
Before the OFS and IPP, public shareholding in Adani Enterprises and Adani Ports was 20% and 23%, respectively. Subsequently, public shareholding-including shareholding of the two FPIs, EIFF and EMR-increased to 25% in both Adani companies.
Common Link
According to Sebi’s investigation, Singapore-incorporated EIFF and Mauritius-based EMR shared Global Opportunities Fund (GOF) from Bermuda as a common shareholder.
GOF’s shareholders comprised Mid East Ocean Trade & Investment of Mauritius (Mid East), Lingo Investments (now Southeast Citrine Trade & Investment), Gulf Asia Trade & Investment and Gulf Arij Trading.
These four shareholders received funding from Nasser Ali Shaban Ahli, a UAE national who maintained close business and financial ties with Vinod Adani.
Chang Chung-Ling, a Taiwanese national, served as a director across these four foreign firms, while Tejal Ramanlal Desai, an Adani Group employee, held power of attorney.
Through a related entity, GOF engaged UAE-based Excel for investment advice. Excel operated as a wholly-owned subsidiary of Assent Trade & Investment. According to Sebi, Vinod Adani has submitted that “Excel and Assent were held by Asankhya Resources Family Trust, settled by him.”
While funding came from a single source through Ahli, investment decisions came from Excel, owned and controlled by Vinod Adani, the regulator said.
Sebi observed that the two FPIs always voted in line with the promoters of Adani companies, unlike other FPIs. They never went against the promoters on important matters such as approval of related party transactions, re-appointment of promoter-directors, and approval of financials.
This voting pattern, when seen together with the investment advisory agreements, indicated Vinod Adani’s control over the FPIs’ shareholding rights, the markets watchdog noted.
Despite this, these holdings were incorrectly classified as “public,” rather than promoter group shareholding, Sebi observed.
The markets regulator has sought recovery of ₹1,984 crore from nine parties, including Vinod Adani, Ahli and Chang, and ₹601 crore from five parties including Vora and Parikh.
