 "Adani Group")
Six of the eight public funds alleged to have been used by people with ties to the Adani Group to buy shares of the conglomerate's listed companies have been shut, Mint reported on Wednesday citing regulatory filings. These funds were based in Bermuda and Mauritius.
The report added that the closure of these funds posed a challenge for the Securities and Exchange Board of India (Sebi) to reach the ultimate beneficiaries of these vehicles.
In a recent report, the Organized Crime and Corruption Reporting Project (OCCRP), a global network of investigative journalists, reported that people with ties to the Adani family used these funds to hold significant stakes in group entities, possibly violating the country's law on maximum ownership.
Mint report said that the closure of some of these funds follows the initiation of an investigation by the Sebi in 2020.
"The developments suggest that an early move by Sebi to investigate the now-shuttered entities would have helped the regulator determine whether they played a role in manipulating Adani group stocks. With the closure of these funds, Sebi now faces increased difficulty in accessing information regarding the ultimate beneficiaries of these entities," it added.
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At least two regulatory experts said that the closure of such publicly pooled funds in a relatively short time is surprising, given that typically they have longer lifespans.
Mauritius-based Assent Trade and Investment Pvt. Ltd was set up in April 2010 and turned defunct in June 2019. Lingo Trading & Investment Pvt Ltd, incorporated in December 2009, closed in March 2015. Mid East Ocean Trade & Investment Pvt. Ltd was set up in September 2011 and closed in August last year.
EM Resurgent Fund was set up in May 2010 and shut down in February last year. Asia Vision Fund set up in May 2010, appointed liquidators in April 2020 and is in the process of winding up, Mint added.
One fund, Emerging India Focus Funds, set up in May 2008, continues to be active.
Interestingly, some of these funds were closed in just a short span of time, unusual for such funds. Bermuda-registered Global Opportunities Fund, registered on January 6, 2005, was shut on December 12, 2006.
A fund is closed when it goes bankrupt, or when it gets acquired and the new owner transfers the fund's assets, or when the investors decide to close it
In its report submitted to the Supreme Court last month, an expert committee said the markets regulator faced difficulty in accessing information about the beneficial owners of overseas funds, adding that pursuing the identity of offshore shareholders was "potentially a journey without destination."
