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$2.4 billion wiped off Adani shares after Hindenburg allegations against regulator - Reuters 12.8.24 BENGALURU, Aug 12 (Reuters) - Adani Group, the Indian conglomerate rocked by a Hindenburg Research report last year, faced another heavy share selloff on Monday after the shortseller accused the head of India's market regulator of having links to offshore funds also used by the group. $2.43 billion, or 1%, had been wiped off the market value of Adani companies by the end of the trading day, although that was a substantial recovery from earlier losses of more than $13 billion. The battle between Hindenburg Research and the Adani Group began 18 months ago when the U.S. shortseller alleged Adani improperly used tax havens, accusations the group denied again on Sunday, saying its overseas holding structure was fully transparent. Citing whistleblower documents, Hindenburg said on Saturday that Madhabi Puri Buch, chair of the Securities and Exchange Board of India (SEBI) since 2022, has a conflict of interest in the Adani matter due to previous investments. Buch said the report's allegations were baseless and in a separate statement the regulator said allegations made by Hindenburg Research against the Adani Group have been duly investigated. Shares in the group's flagship firm Adani Enterprises (ADEL.NS) closed out Monday 1.1% lower, while Adani Ports (APSE.NS), Adani Total Gas (ADAG.NS), Adani Power (ADAN.NS), Adani Wilmar (ADAW.NS) and Adani Energy Solutions (ADAI.NS) were down between 0.6% and 4.2%. Only Adani Green (ADNA.NS) bucked the trend, closing 1% higher. "The allegations are coming for the second time. Lot of investigations have happened over the last year and a half. This is a temporary, knee-jerk reaction. Things will get back to normalcy," said Sunny Agrawal, head of fundamental equity research at SBICAPS Securities. Investments from Abu Dhabi-based International Holding (IHC.AD) and U.S. boutique investment firm GQG Partners have helped restore some investor confidence since Hindenburg's first report in January 2023, with Adani Group's share value losses narrowing to about $32.5 billion from $150 billion in the immediate aftermath. Buch termed Hindenburg's allegations an attempt at "character assassination" following the regulator's enforcement action and "show cause" notice to the shortseller for violating Indian rules. A show cause notice signals an intention to take disciplinary action if satisfactory explanations are not provided.

Hindenburg vs. Adani vs. SEBI: The Latest Twist This weekend, the financial world was abuzz as Hindenburg Research, a high-profile short-selling firm, leveled serious accusations against SEBI’s chairperson, Madhabi Puri-Buch. Hindenburg claimed wrongdoing, but SEBI and Madhabi Puri-Buch have swiftly countered these allegations. Short sellers, often seen as the stock market’s vigilantes, profit by betting that stock prices will fall. They sell high and buy back low, a strategy that, while sometimes uncovering corporate flaws, can also be driven by less noble motives. Hindenburg first grabbed headlines in January 2023 with allegations of stock manipulation and fraud against the Adani Group. This sparked a dramatic plunge in Adani’s stock prices, with some companies seeing drops of up to 80%. By mid-2024, however, Adani's stock had largely rebounded. In March 2023, the Supreme Court of India tasked SEBI with probing these claims. By early 2024, SEBI had nearly finished its investigation, though the results are still under wraps. The story took another turn in early July when Hindenburg disclosed that SEBI had issued a notice accusing them of not revealing certain information and potentially profiting from misleading statements. The drama escalated on August 10 when Hindenburg accused SEBI Chairperson Madhabi Puri-Buch and her husband of ties to offshore funds linked to Adani, suggesting potential conflicts of interest due to her husband’s role with Blackstone, a major real estate investment firm. SEBI and Puri-Buch were quick to respond, urging calm and clarity. SEBI assured that Madhabi Puri-Buch has always been open about her financial interests and has stepped back from any decisions where conflicts could arise. Madhabi Puri-Buch dismissed the claims as unfounded attacks aimed at damaging her reputation and SEBI’s credibility. IIFL, mentioned in the accusations, also refuted any connection to Adani. This latest chapter underscores the double-edged nature of short selling. While these firms can spotlight genuine issues, their tactics can also provoke controversy and confusion.

Good morning News Headline from Leading Financial News Papers, Compiled by 𝐑𝐔𝐃𝐑𝐀 𝐒𝐇𝐀𝐑𝐄𝐒 Tuesday, 19 November, 2024 • Bulk deal: Kotak Small Cap Fund picks up 2.08% stake in Medplus Health Services • Enviro Infra Engineers sets IPO price band at Rs 140-148 per share; eyes Rs 650 crore • FIIs net sell shares worth Rs 1,403 crore, DIIs net buy Rs 2,331 crore • Crizac plans to raise Rs 1,000 crore via IPO, refiles draft papers with SEBI • Arisinfra Solutions gets SEBI nod for its Rs 580-crore IPO • Borana Weaves files draft papers with SEBI to raise funds via IPO • 'If investors want to own India cheap, they may never own it': CLSA's Shaun Cochran • Zinka Logistics Solutions IPO sees 1.86x subscription on Day 3, GMP indicates flat listing • EMS player PG Electroplast forays into EV manufacturing for Africa's Spiro Mobility • L&T Tech to help US develop smart city projects in Colorado • Goldman says ‘go for gold’ as central banks buy, Fed cuts in ‘25 • Nalco, Hindalco, Vedanta shares rise as China cancels export tax rebates for aluminium • Govt revises capital restructuring norms on share buybacks, dividends for CPSEs • NTPC Green Energy raises Rs 3,960 crore via anchor book out of Rs 10,000-crore IPO •Economic growth outlook for India more than sufficient to warrant an overweight stance, says LGT Bank's Stefan Hofer • Waaree Energies Q2FY25 profit jumps 15% to Rs 362 crore, to invest Rs 600 crore in subsidiaries • Flight operations hit at Delhi Airport as smog hinders visibility • SBI to open 500 new branches in the Financial year 2025, says Nirmala Sitharaman • Ease of doing biz, investment options driving structural shift in banking system: SBI chairman •Gold loans may soon come with monthly payment plans • Rs 30,000 crore maritime development fund to help shipbuilding • Small wearables brands exit market as low margins hurt • Ujjivan Bank to sell Rs 270 crore of soured microloans • Guv raises concerns over complaints against pvt banks • Interest rates will have to be far more affordable: FM • NTPC Green IPO to take advantage of India's renewable energy landscape • Sebi orders four online bond platforms to cease operations • City gas cos' stocks in the red as govt cuts APM quotas • SBI raises $500 million in five-year dollar bonds • As market cools, wealthy investors stay away from IPOs • M&M, Skoda-VW India JV talks hit speed bump • US to call for Google to sell Chrome browser: report • Plan afoot for Singtel, Mittals to equalise direct stake in Bharti Airtel • Starmer eyes UK trade deal with India even Sunak couldn’t pull off For more details- https://lnkd.in/eghyA3V

Good morning News Headline from Leading Financial News Papers, Compiled by 𝐑𝐔𝐃𝐑𝐀 𝐒𝐇𝐀𝐑𝐄𝐒 Tuesday, 19 November, 2024 • Bulk deal: Kotak Small Cap Fund picks up 2.08% stake in Medplus Health Services • Enviro Infra Engineers sets IPO price band at Rs 140-148 per share; eyes Rs 650 crore • FIIs net sell shares worth Rs 1,403 crore, DIIs net buy Rs 2,331 crore • Crizac plans to raise Rs 1,000 crore via IPO, refiles draft papers with SEBI • Arisinfra Solutions gets SEBI nod for its Rs 580-crore IPO • Borana Weaves files draft papers with SEBI to raise funds via IPO • 'If investors want to own India cheap, they may never own it': CLSA's Shaun Cochran • Zinka Logistics Solutions IPO sees 1.86x subscription on Day 3, GMP indicates flat listing • EMS player PG Electroplast forays into EV manufacturing for Africa's Spiro Mobility • L&T Tech to help US develop smart city projects in Colorado • Goldman says ‘go for gold’ as central banks buy, Fed cuts in ‘25 • Nalco, Hindalco, Vedanta shares rise as China cancels export tax rebates for aluminium • Govt revises capital restructuring norms on share buybacks, dividends for CPSEs • NTPC Green Energy raises Rs 3,960 crore via anchor book out of Rs 10,000-crore IPO •Economic growth outlook for India more than sufficient to warrant an overweight stance, says LGT Bank's Stefan Hofer • Waaree Energies Q2FY25 profit jumps 15% to Rs 362 crore, to invest Rs 600 crore in subsidiaries • Flight operations hit at Delhi Airport as smog hinders visibility • SBI to open 500 new branches in the Financial year 2025, says Nirmala Sitharaman • Ease of doing biz, investment options driving structural shift in banking system: SBI chairman •Gold loans may soon come with monthly payment plans • Rs 30,000 crore maritime development fund to help shipbuilding • Small wearables brands exit market as low margins hurt • Ujjivan Bank to sell Rs 270 crore of soured microloans • Guv raises concerns over complaints against pvt banks • Interest rates will have to be far more affordable: FM • NTPC Green IPO to take advantage of India's renewable energy landscape • Sebi orders four online bond platforms to cease operations • City gas cos' stocks in the red as govt cuts APM quotas • SBI raises $500 million in five-year dollar bonds • As market cools, wealthy investors stay away from IPOs • M&M, Skoda-VW India JV talks hit speed bump • US to call for Google to sell Chrome browser: report • Plan afoot for Singtel, Mittals to equalise direct stake in Bharti Airtel • Starmer eyes UK trade deal with India even Sunak couldn’t pull off For more details- https://lnkd.in/gjy-gujk

Hindenburg wanted to crash the Indian Market but Hindenburg was not successful..😊 Hindenburg was accused of hatching a conspiracy to induce Foreign Institutional Investors (FIIs) to buy shares at a low price. They also made false allegations against Adani and the SEBI chief, with the intention of crashing the Indian market. However, Hindenburg's entire plan failed. The Indian market did not react to Hindenburg's allegations, and only Adani shares fell by 2%. Hindenburg Report: This controversial report published by Hindenburg Research, a US-based short-seller, which made several allegations of fraud and stock manipulation against the Adani Group, a major Indian conglomerate. The suggests a conspiracy theory that Hindenburg intentionally made false allegations to drive down the price of Adani shares, allowing them to profit from short selling. Market Reaction The text claims that the Indian market as a whole did not react significantly to the Hindenburg report, and only Adani shares experienced a temporary decline. SEBI: The Securities and Exchange Board of India (SEBI) is the regulatory body for the securities market in India. The text alleges that Hindenburg also made false allegations against the SEBI chief. Important Notes: Allegations vs. Facts: The text presents allegations as facts. It is important to note that these are allegations made by one party and have not been proven in a court of law. Complex Issue: The Hindenburg report and its aftermath are a complex issue with multiple perspectives. Market Dynamics: The stock market is influenced by a multitude of factors, and it is difficult to attribute any single event, such as the Hindenburg report, as the sole cause of market movements. Here are some additional points to consider: Short Selling: Short selling involves borrowing shares and selling them with the expectation that the price will fall, allowing the seller to buy them back at a lower price and make a profit. Regulatory Response: SEBI conducted an investigation into the allegations made by Hindenburg and took certain regulatory actions. Investor Sentiment: The Hindenburg report significantly impacted investor sentiment towards the Adani Group and raised concerns about corporate governance in India.

Striking A Balance: SEBI’s Fixed Price Method In Voluntary Delisting On June 27, 2024, the Securities and Exchange Board of India (SEBI) introduced significant amendments to the SEBI (Delisting of Equity Shares) Regulations, 2021. These amendments bring back the fixed price method alongside the reverse book building (RBB) process for voluntary delisting, addressing the speculative trading and inflated exit prices associated with the RBB method. Historical Evolution of India’s Delisting Framework: India's delisting regulations have evolved over the years to balance promoters' and investors' interests while maintaining market integrity. Initially, the fixed price method faced criticism for its lack of transparency. In 2003, SEBI introduced the RBB process to enhance transparency and fairness, but it eventually led to speculative trading and inflated exit prices. Reintroduction of the Fixed Price Method: SEBI's recent amendments reintroduce the fixed price method with a mandate that the offered price includes at least a 15% premium over the floor price. This move aims to counteract the speculative trading and inflated prices seen with the RBB method, providing a fair and transparent exit opportunity for shareholders. Limitations and Issues with the RBB Method: The RBB process, while initially successful, led to speculative trading and significant price volatility. Examples include the delisting of Hexaware Technologies in 2020, where speculative trading surged, and Brady and Morris Engineering Company’s delisting attempt, which saw an exit price premium of 1128.70%. Key Amendments in SEBI Delisting Regulations: Fixed Price Premium: A minimum 15% premium over the floor price. Alternative Delisting Framework for IHCs: A simplified process for Investment Holding Companies. Counter-Offer Mechanism: Lower threshold for making counter-offers. Adjusted Book Value Parameter: Additional parameter for determining the floor price. Modified Reference Date: New reference date for computing the floor price. Concluding Remarks SEBI’s reintroduction of the fixed price method strikes a balance between the interests of investors and promoters, offering a fairer and more predictable exit for investors. This method reduces speculative trading and market manipulation, ensuring a stable and transparent market environment. By safeguarding minority shareholders and promoting inclusivity, SEBI’s regulatory approach enhances investor confidence and market stability. #SEBI #Delisting #FixedPriceMethod #ReverseBookBuilding #Investors #Promoters #MarketIntegrity #Regulations #StockMarket #Volatility #Transparency #TLO #TheLegalOasis

SEBI’s New Delisting Amendments: SEBI’s reintroduction of the fixed price method in voluntary delisting balances fairness and transparency, addressing issues of speculative trading and inflated exit prices. These amendments mark a significant step in ensuring a stable and predictable market environment. #SEBI #Delisting #FixedPriceMethod #ReverseBookBuilding #Investors #Promoters #MarketIntegrity #Regulations #StockMarket #Volatility #Transparency #TLO #TheLegalOasis

Brief details: Appeal at Apex court The appellant-Jyoti Limited applied for listing of certain equity shares to the Bombay Stock Exchange whihc was declined stating "appellant had not taken in principle approval from the Stock Exchange and that the appellant had not even taken the approval of the shareholders for the allotment of the shares to the Asset Reconstruction Private Limited" The above order of the BSE rejecting the application of the appellant for the listing of shares was upheld and confirmed by the Securities Appellate Tribunal Grounds; Section 9(1) of SARFEASI Act 2002, permits RARE to take measures such as conversion of any portion of debt into shares of the borrower company. The appellant company had not proposed to increase the subscribed capital rather it is RARE that has done it, no approval of shareholders is necessary. Facts: Here it is evident that the appellant company had entered into discussion with RARE and it was agreed upon between the parties to convert part of its outstanding debts of Rs.32.80 Crore into equity shares.Resolution passed by BOD was not endorsed by shareholders of the company.application to lsit the shares was by Appellant Company and not by RARE. Accordingly, as contemplated by Section 62(1)(c) of the Companies Act, 2013, the approval of the shareholders would be mandatory before the shares are accepted for listing on the BSE. Finding of SAT that the approval of the BSE is necessary in view of Regulation 28 of the SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015, is clear and we do not have a different opinion. Special resolution of the shareholders is necessary which is lacking in the instant case. This statutory appeal under Section 22 F of Securities Contracts (Regulation) Act, 1956 is devoid of merit and is dismissed.

National Stock Exchange of India's valuation in the private markets has doubled to $36 billion in the last four months, backed by investor expectation that an initial public offering could materialize as early as the first quarter of next year, according to people familiar with the matter. Unlisted shares in the world's largest derivative exchange by contracts are in high demand with wealth managers whose rich clients want to own a piece of the company, said the people, asking not to be identified citing private information. While the demand for them far outstrips the supply, the shares have sold in the range of Rs 5,700-6,500 ($68 to $78) recently, the people said. The firm's valuation could increase further over the coming months as the listing plans move ahead, the people said. Shares in closely-held firms can change hands in the secondary market, either on specialist private trading platforms or in individually negotiated transactions. Due to the nature of the secondary market it's unclear how many shares changed hands. While one of the people said NSE is working toward completing documentation for an IPO by early next year, the potential listing could still take longer. A representative for NSE didn't immediately respond to emails seeking comment. Earlier this month, the markets regulator Securities and Exchange Board of India cleared NSE, as the bourse is called, of any wrongdoing in a case of unfair market access dating back nearly a decade and which represented a key hurdle for the firm to list publicly. The exchange, backed by large investors like Life Insurance Corporation of India and Canada Pension Plan Investment Board, first filed papers for an IPO in 2016. The plans to take it public suffered a setback when the regulator barred it from the securities market for a period of six months and ordered it to pay a fine after ruling that brokerage OPG Securities Pvt. benefited from unfair market access. The privately-held NSE was valued at between $17 billion to $18 billion when private equity firm ChrysCapital Management Co., that holds a 4% stake in it, executed a $700 million continuation fund to hold the company for longer in May this year.

Promoter's shareholding inflation refers to the practice where promoters of a company artificially inflate their shareholding to maintain control or manipulate stock prices. This issue has garnered significant attention in India, especially with high-profile cases involving major corporations. In India, the Securities Contracts (Regulation) Rules, 1957, mandate that at least 25% of a listed company's shares must be held by the public. This rule ensures sufficient free float in the market, allowing for accurate price discovery and preventing market manipulation. Promoters and their immediate family, along with subsidiaries or associates, are excluded from this public shareholding requirement. One of the most notable cases of alleged promoter shareholding inflation involves the Adani Group. Investigations by the Organized Crime and Corruption Reporting Project (OCCRP) revealed that Mauritius-based funds, controlled by individuals linked to the Adani family, were used to buy and sell large volumes of Adani stocks. This practice allegedly allowed the Adani Group to maintain a promoter shareholding above the 75% threshold, in violation of SEBI regulations. Similarly, the case of Patanjali Foods highlights the consequences of failing to meet public shareholding norms. The company's promoter shareholding was frozen by stock exchanges after it failed to dilute its promoter stake to meet the 25% public shareholding requirement. The Securities and Exchange Board of India (SEBI) has been proactive in addressing issues related to promoter shareholding. SEBI's regulations require detailed disclosures of promoter holdings and any changes therein. Additionally, SEBI has proposed shifting the regulatory focus from "promoters" to "persons in control" to better capture the evolving corporate ownership structures, especially in companies with significant institutional investor presence. However, enforcing these regulations has been challenging. The Adani case, for instance, underscores the difficulties in tracking beneficial ownership through complex offshore structures. Despite SEBI's efforts, the use of proxy investors and opaque investment vehicles continues to pose significant regulatory hurdles. Promoter shareholding inflation can lead to severe legal consequences, including delisting from stock exchanges, freezing of promoter shares, and hefty fines. SEBI has the authority to investigate and penalize companies and individuals involved in fraudulent practices under the SEBI Act, 1992. Moreover, the introduction of class-action suits in India has empowered minority shareholders to seek redressal against corporate malpractices. For instance, the class-action suit against Jindal Poly Films Ltd. by its minority shareholders alleges significant financial losses due to related-party transactions orchestrated by the promoters.