Sat. Nov 23rd, 2024
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Indian agency was probing the group after Hindenburg Research last year alleged the improper use of tax havens and stock manipulation.

India’s Supreme Court says the Adani Group does not need to face more investigations beyond the current scrutiny of the market regulator, a major relief for the conglomerate hit hard by a United States-based shortseller’s allegations of wrongdoing.

The Securities and Exchange Board of India (SEBI) has been probing the Adani Group, led by billionaire Gautam Adani, after Hindenburg Research in January 2023 alleged the improper use of tax havens and stock manipulation by the group.

The Adani Group denied the allegations, but Hindenburg’s report still chopped $150bn off its stock market value.

Though some investor confidence returned in recent months as Adani won the backing of bankers and investors, the Hindenburg report and the regulatory scrutiny have weighed on the group’s business dealings and reputation.

The Supreme Court, which was ruling on cases brought by public interest litigants seeking a special investigation team to probe the matter, on Wednesday said “the facts of this case do not warrant” such a change, even though the court had the powers to transfer the investigation.

The verdict signals there will not be increased regulatory or legal risk on the Adani Group beyond the current SEBI investigation.

Reflecting that view, shares of various Adani Group companies rose, with Adani Energy Solutions up 9.1 percent, Adani Total Gas surging 7.1 percent, Adani Green Energy jumping 5.5 percent and the flagship business Adani Enterprises rising 2.6 percent, Reuters news agency reported.

The top court, which was overseeing the SEBI probe, also said there was no need for it to order any changes in the country’s disclosure rules for offshore funds.

Hindenburg had alleged Adani’s offshore shareholders were used to violate certain SEBI rules, even though the company maintained it complies with all laws.

After the Supreme Court ruling, Gautam Adani said on X, formerly Twitter, that the court’s judgement shows truth has prevailed and the group’s “contribution to India’s growth story will continue”.

“Post this verdict global investors will have more confidence in investing in the shares of the company,” said Deven Choksey, managing director of KRChoksey Shares and Securities Pvt Ltd, a broker.

The regulator had previously informed the Supreme Court that it would take appropriate action based on the outcome of its investigations. The court on Wednesday gave SEBI three months to complete its investigations.

The Supreme Court also said it does not need to intervene in the current regulations governing offshore investors of Indian companies. SEBI tightened those regulations in June by making disclosures more stringent to bring clarity to opaque corporate structures.

Under India’s law, every company needs to have 25 percent of its shares held by public shareholders to avoid price manipulation, but Hindenburg alleged that some of Adani’s offshore shareholders were used to violate this rule. Adani has said it complies with all laws.

“The procedure followed in arriving at the current shape of the regulations does not suffer from irregularity,” the court said on Wednesday, while backing SEBI’s regulatory position on foreign portfolio disclosures.

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