No evidence that Vinod Adani controlled FPIs, says SEBI; drops Adani MPS case

The Securities and Exchange Board of India (SEBI) could not establish that Adani Group Chairman Gautam Adani’s brother Vinod Adani exercised control over investments made by two foreign portfolio investors (FPIs) in four listed Adani Group companies, disposing of proceedings related to alleged violations of minimum public shareholding (MPS) requirements.

In its 81-page final order issued on Monday, SEBI said there was no evidence that Vinod Adani was involved in the investment decision-making process of the two FPIs – Emerging India Focus Funds (EIFF) and EM Resurgent Fund (EMR) – in Adani Enterprises, Adani Power, Adani Ports and SEZ, and Adani Transmission, now known as Adani Energy Solutions.

The probe originated from complaints received in June and July 2020, with a subsequent show-cause notice alleging that shares held by the two FPIs between 2013 and 2018 were, in substance, promoter holdings but were shown as public shareholding.

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SEBI said its investigation could not establish that Vinod Adani controlled the investment decisions of the two FPIs. It noted that de facto control must be demonstrated through evidence of “positively directing management or policy decisions” and cannot be based solely on business or financial relationships.

The regulator also rejected allegations that Vinod Adani exercised control through Nasser Ali Shaban Ahli and Chang Chung-Ling, or that they provided financing to four underlying investors that invested in Adani Group companies through the FPIs.

“Merely based on business or financial relationship, it cannot be held that Vinod Adani is in control of all of them,” SEBI said.

SEBI, however, established allegations of failure to furnish correct and complete information against Ahli and Chang Chung-Ling, imposing a ₹20 lakh penalty on each. Eighteen other entities named in the notice had already settled the proceedings by paying settlement amounts.

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The regulator also found no evidence that Vinod Adani positively directed the management or policy decisions of the two FPIs. It added that there was no allegation that he was the source of financing for their investments in Adani Group companies.

SEBI similarly rejected the allegation concerning Opal Investments Pvt Ltd’s investment in Adani Power.

The show-cause notice had alleged a wrongful gain of ₹1,984 crore through the investment structure. However, SEBI said that since effective control over the FPIs and Opal had not been established, the consequential allegations of MPS violations were not upheld. The related allegations under the PFUTP Regulations also did not survive.