Adani-linked firms file settlement bids in Sebi's public shareholding probe

Entities associated with the Adani Group have reportedly approached the Securities and Exchange Board of India (Sebi) to settle allegations of violating public shareholding norms in four of the group’s listed companies. Among the applicants is Emerging India Focus Funds (EIFF), a Mauritius-based foreign portfolio investor allegedly linked to Vinod Adani, the elder half-brother of Gautam Adani. According to a report by The Economic Times, EIFF has proposed a settlement amount of Rs 28 lakh.

 

Other Adani-linked individuals, including Vinay Prakash, a director at Adani Enterprises, and Ameet Desai, a director at Ambuja Cements, have each offered Rs 3 lakh to settle the case. Adani Enterprises itself has also submitted a settlement application. These proposals follow a September 27 show-cause notice issued by Sebi. While such applications do not confirm guilt, they are seen as procedural measures.

 

Sebi has yet to decide on the applications. While at least four entities have filed settlement requests, it is possible that all involved Adani entities have applied. Filing for settlement is a standard response to show-cause notices, as not doing so within 60 days forfeits this option, the report said.

 

What are the allegations against the Adani Group entities?

 

The show-cause notices involve 26 entities, including Gautam Adani, his brothers Vinod, Rajesh, and Vasant, nephew Pranav Adani, and brother-in-law Pranav Vora. Sebi has questioned why these entities should not face action, including potential bans from the securities market, for alleged violations.

 

The notices allege that Vinod Adani and his affiliates accrued over Rs 2,500 crore through complex shareholding arrangements. These structures purportedly allowed them to bypass public shareholding requirements in Adani Enterprises, Adani Power, Adani Ports and Special Economic Zone, and Adani Energy Solutions (formerly Adani Transmission).

 

Sebi’s investigation, which began in October 2020, examined transactions from 2012 to 2020. It found that two foreign portfolio investors—EIFF and EM Resurgent Fund (EMR)—and Opal Investments had shareholdings tied to Vinod Adani. These entities allegedly helped the Adani Group simulate compliance with public shareholding norms by acquiring shares during public offerings and institutional placements.

 

Shares of Adani Enterprises were obtained during its offer-for-sale (OFS), while shares of Adani Ports were acquired through its institutional placement programme (IPP). Shares of Adani Power were secured via a merger. The three foreign investors also invested in Adani Energy Solutions, the report said.

 

Before the OFS and IPP, public shareholding in Adani Enterprises and Adani Ports stood at 20 per cent and 23 per cent, respectively. Following these transactions, public shareholding, including that of the two FPIs—EIFF and EMR—rose to 25 per cent in both companies.

 

Adani Group’s stand on the issue

 

The Adani Group entities have denied wrongdoing, stating that their settlement applications were precautionary measures. A person close to the group said the entities had also filed responses contesting the charges and sought access to Sebi’s evidence. “The application does not admit or deny the charges but aims to ensure procedural compliance,” the report cited a source as saying.

 

Sebi’s investigation revealed patterns indicating Vinod Adani’s influence over the FPIs, including consistent voting in alignment with Adani promoters on key matters such as approving related-party transactions and reappointing directors. Despite this, their holdings were categorised as “public,” contrary to Sebi’s findings that they should have been classified as promoter group shareholdings.

 

What led to Sebi’s inquiry into Adani affiliates?

 

Sebi began its inquiry following complaints in mid-2020 regarding non-compliance with the mandatory 25 per cent public shareholding requirement for listed companies. The regulator has sought to recover approximately Rs 1,984 crore from nine parties, including Vinod Adani, and Rs 601 crore from five others.