In a report last week, Hindenburg Research, a small New York-based short seller made famous by its exposé of India’s Adani Group last year, alleged that the head of India’s securities regulator had a conflict of interest with Adani Group that prevented her from conducting a government probe into the conglomerate. Citing leaked emails, Hindenburg claimed that Madhabi Puri Buch, who has served as chairperson of the Securities and Exchange Board of India (SEBI) since March 2022, had multi-layer offshore investments linked to the Adani family.
Specifically, Buch had an investment in 360 ONE WAM, a Mumbai wealth management group, that gave her direct exposure to Adani shares. Additionally, Buch and her husband own stakes in offshore Mauritius shell companies with links to Vinod Adani, the older brother of Adani Group founder and CEO Gautam Adani, Hindenburg said. Reuters subsequently released documents showing that Buch earned revenue from Agora Advisory Private Limited, a consulting firm in which she owns a 99 percent stake, constituting a potential violation of SEBI rules.
In January 2023, Hindenburg released an explosive report accusing Adani Group of pulling “the largest con in corporate history,” that involved stock manipulation and accounting fraud. Hindenburg found 38 Mauritius shell companies operated by Adadi Group chairman Gautam Adani’s older brother Vinod Adani. Also in the original report, the short-seller revealed that it had taken a short position on Adani Group—a standard strategy for short sellers. Hindenburg’s bet paid off after Adani Group stocks plummeted more than 60 percent in the weeks following the report’s release. While Adani Group’s collective market cap has recovered since then, some subsidiaries, like Adani Gas, are yet to recover to their pre-Hindenburg levels.
The latest Hindenburg exposé of Buch comes as a response to SEBI sending a show cause notice to Hindenburg, arguing that the short-seller exaggerated facts and misled investors, including not properly disclosing that it was short Adani Group and stood to benefit from its exposé. On July 1, Hindenburg released a report disputing all of SEBI’s claims and made the show cause letter available to the public. The firm argued that “virtually everyone on Earth knew we were [shorting] Adani because we prominently and repeatedly disclosed it.”
Since Hindenburg reported on Buch last week, members of India’s congress have called for her resignation. A BJP spokesman, speaking on behalf of Prime Minister Narendra Modi’s party, called the allegations against Buch baseless. Buch insists that she has made all the necessary disclosures, which SEBI and the Institutional Investor Advisory Services, a proxy advisory firm in India, have reiterated. Buch, Adani Group, 360 ONE WAM and SEBI all deny wrongdoing. Adani Group shares, traded on India’s National Stock Exchange, fell 1 percent on Aug. 10, the day of Hindenburg’s report release, shedding $2.4 billion in market cap. The share price has since recovered.
Adani’s meteoric rise from relative obscurity just 15 years ago to becoming a dominant force in India’s economy is nothing short of extraordinary. This rapid growth has been fueled by a relentless series of acquisitions, primarily orchestrated by Adani Enterprises, the conglomerate’s flagship incubator. Once these acquisitions mature, they are spun off into independent entities. The Adani Group has averaged two acquisitions annually for the last three years. Based in Gujarat, Adani Group’s rise is also closely tied to the political trajectory of Gujarat’s former chief minister, Modi, ascending to India’s prime minister, further solidifying Adani’s influence and reach.
