Hindenburg row: IPE-Plus Fund 1 didn't invest in Adani stocks, says 360-One

Says fund in which the Buchs invested focused on debt, maintains no investor had any role in its ops

360-One WAM, formerly IIFL Wealth Management, on Sunday said that its IPE-Plus Fund 1, in which Securities and Exchange Board of India (Sebi) Chairperson Madhabi Puri Buch and her husband Dhaval Buch had invested, did not make any direct or indirect bet on the shares of Adani group during its tenure.

The wealth and asset management firm was responding to the American short-seller Hindenburg Research’s latest report which alleged that IPE-Plus Fund 1 was set up by an Adani director through the erstwhile IIFL Wealth Management, to invest in the Indian markets to inflate Adani group stock prices.

However, 360-One WAM maintained that IPE-Plus Fund 1, a Mauritius-registered fund, primarily focused on debt investments. “At its peak, the fund’s assets under management (AUM) reached approximately $48 million, with over 90 per cent of the fund consistently invested in bonds,” it said.

 

Brushing aside the American short-seller’s allegations that Buch and her husband had stakes in the fund, 360-One WAM said: “No investor had any involvement in the fund’s operations or investment decisions. Madhabi Buch’s and Dhaval Buch’s holdings in the fund were less than 1.5 per cent of the total inflow into the fund.”

Meanwhile, Puri Buch and her husband said that they had invested in the fund because the fund’s chief investment officer (CIO), Anil Ahuja, was a childhood friend of Dhaval and ex-employee of Citibank, J P Morgan, and 3i Group plc, with many decades of strong investing career.

Ahuja and Dhaval studied together in school and later at IIT-Delhi. The Buchs added that they redeemed their investment from the fund when Ahuja left the position as CIO in 2018.

Incidentally, Ahuja was a nominee director of 3i investment fund in Adani Power in 2007-08 and later a director of Adani Enterprises until 2017.

The couple also corroborated the point that the fund “at no point in time invested in any bond, equity, or derivative of any Adani group company”.

360-One WAM added that IPE-Plus Fund 1 was a fully compliant and regulated fund and operated between 2013 and 2019.

Puri Buch and her husband opened their accounts in the fund in 2015, when they were NRIs based in Singapore. Dhaval is said to be a Singapore citizen now.

According to custodians and industry experts, it is a common practice among overseas Indians to seek domestic exposure through such investment vehicles. They said that investing in an offshore fund is being portrayed as having a “stake” in the fund to create headlines.

“In reality, the managing shareholder or the general partner own the structure. They pool investment and draw management fees, while participating shareholders or limited partnerships are mere investors without management rights or voting rights,” explained an official with a foreign bank.

Hindenburg Research has questioned Puri Buch’s decision to use an FPI structure instead of a “reputable” onshore mutual fund.

FPIs are also considered to be better regulated and more trustworthy, said industry players. NRIs can also invest in domestic mutual funds compliant with the FEMA (Foreign Exchange Management Act).

The latest report by the short-seller questions Puri Buch’s objectivity in handling and investigating the Adani firms of the alleged violations through FPIs and siphoning off funds through these funds.

The report cites her stake in the FPI as the reason for the “unwillingness to take meaningful action” in the matter.