The Supreme Court of India formed a committee to investigate the cause of the market turmoil that has engulfed billionaire
‘s namesake conglomerate, saying it would look for regulatory failures or securities-law violations that could have contributed to a massive selloff in the group’s stocks.
The inquiry by the six-person panel adds to an investigation that is already being conducted by the country’s securities and markets regulator. The new expert committee will be chaired by a former Supreme Court judge and includes two bankers, a lawyer, an entrepreneur and a retired Bombay High Court judge. It has been given two months to come up with a report, according to a court order on Thursday.
The directive comes a little over a month after U.S. short seller Hindenburg Research released a lengthy report detailing wide-ranging fraud allegations against Adani Group, an energy-and-infrastructure conglomerate. It sparked a weekslong selloff that has wiped out roughly $140 billion in market value from the nine largest listed companies under Adani Group.
Hindenburg alleged the conglomerate had engaged in stock-price manipulation, took on excessive leverage, practiced accounting fraud and conducted other malpractices. Adani Group has repeatedly denied those allegations.
Mr. Adani said on Thursday that the conglomerate welcomed the Supreme Court’s order. “It will bring finality in a time bound manner. Truth will prevail,” the 60-year-old founder and chairman of the Adani Group said in a post on Twitter.
The Supreme Court order came just hours before Adani Group said
a Fort Lauderdale, Fla.-based asset manager, had bought shares worth $1.9 billion in four Adani companies, including
Adani Enterprises Ltd.
, the flagship.
GQG’s chairman and chief investment officer,
said his firm bought the shares from an Adani family trust. Mr. Jain said that he had been considering investing in the Adani Group for five years, but held back until the recent slide in stock prices. GQG bought the shares at between a 4% to 11% discount based on Thursday’s closing prices.
“The stocks were a little bit expensive, and the recent news has given us an opportunity to buy what we think are really high quality, irreplaceable assets,” said Mr. Jain.
The top court said its directive was prompted by four petitions that it had received, and a need to protect the interests of Indian investors from market volatility. Those pleas included requests that it look into how exposed a large state-run bank and a state-backed insurance firm were to Adani Group. The two institutions, the
Life Insurance Corp. of India,
have said their exposure to the conglomerate is manageable.
The court has asked India’s markets regulator, the Securities Exchange Board of India, to investigate if Adani Group manipulated stock prices of its listed companies—one of Hindenburg’s key allegations—and if there were failures in regulatory oversight. The court also ordered the regulator to conclude its investigation within two months and file a status report on it.
After the release of Hindenburg’s report on Jan. 24, Adani Group scrapped a multibillion-dollar secondary share sale by its flagship business after its share prices plummeted, and repaid some debt ahead of maturity in a bid to shore up investor confidence. Its executives recently went on an international roadshow in Singapore and Hong Kong to meet with bond investors, hoping to convince them that the Adani companies are financially stable.
The tumult has also prompted India’s financial institutions to publicly state their exposure to the group. India’s parliamentary sessions have been disrupted by opposition parties’ demands that the government of Prime Minister
address concerns raised by Hindenburg’s report.
Mr. Adani’s businesses benefited from links with India’s current government, led by Mr. Modi, as the country went on a modernization drive. Mr. Adani’s wealth was estimated to be at $119 billion before Hindenburg released its report, according to the Bloomberg Billionaires Index. As of Thursday, that net worth has fallen to $43.1 billion.
Write to Weilun Soon at email@example.com
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