The Hindenburg report alleges SEBI chairperson Madhabi Puri Buch having held “stakes in both the obscure offshore funds used in the Adani money siphoning scandal”.
Hindenburg Report Saga: In January last year, US-based short-seller Hindenburg Research issued a report levelling accusations at Adani Group of indulging in investment, stock manipulation and undisclosed related party transactions. These allegations by Hindenburg had jolted the India stock market, lowering Adani stocks to a tremendous amount. Now, the US-based short-seller again come up with a report that has raised questions on India’s capital markets regulator, Securities and Exchange Board of India (SEBI). In the recently published report, Hindenburg has launched a direct attack on Madhabi Puri Buch, Sebi Chairperson, accusing the regulatory authority of turning a blind eye to the alleged undisclosed network of shell entities associated with the Adani Group.
Hindenburg Report: SEBI Chief Under Question
The Hindenburg report levelled allegations on SEBI chairperson Madhabi Puri Buch for having held “stakes in both the obscure offshore funds used in the Adani money siphoning scandal”.
However, Buch has denied the allegations levelled by Hindenburg Research. But the there are several unanswered questions still hovering in the sky about her associations with other companies.
The recent report from Hindenburg has triggered some questions about Madhabi Puri Buch encouraging the idea of real estate investment trusts as an attractive investment class. It’s interesting to note that she has done so without openly acknowledging that her husband Dhaval Buch currently serves as an advisor to Blackstone Inc. Interestingly, this company sponsors half of the REITs listed in India.
The SEBI Chairperson’s close links with Blackstone, a US-based private equity firm, have raised concerns about a potential conflict of interest, The Morning Context reported.
“Blackstone is heavily invested in India. It is the promoter of many companies in India. That [Buch] has recused herself from Blackstone matters isn’t enough given the amount of investment they have in India,” The Morning Context quoted a senior fund manager, who requested for anonymity.
Blackstone’s participation keeps Hindenburg’s claims in spotlight, preventing it from being swept under the news carpet. With this ongoing issue, SEBI is bound to address the predicament of their chairperson, who used to hold a key position in the corporate world before stepping into regulatory duties. This previous role could cause potential interest conflicts.
Hindenburg Report: Blackstone Holds Significant Stake In Major Indian Companies
Insiders from the capital market are voicing their concerns about Madhabi Puri Buch’s potential conflict of interest threatening her role as a regulator due to her interconnected network. Though Buch has asserted her detachment from matters involving Blackstone, one must remember, Blackstone holds significant shares in multiple leading entities like Indiabulls Housing Finance (rebranded as Sammaan Capital), Aadhar Housing Finance, ASK Investment Managers, Care Hospitals, and Mphasis. These acquisitions by the firm’s subsidiaries have been duly noted by The Morning Context.
Right now, we’re left with the question mark as to whether Buch has deliberately chosen not to involve herself in any matters pertaining to firms where Blackstone has a stake. It’s also uncertain how much Blackstone-associated companies feature on her list of recusals. At the moment, neither SEBI nor Buch have let this list be known to the general public.
In February last year, SEBI allowed an IPO of Aadhar Housing Finance, the company which is controlled by Blackstone. Notably, this happened during the leadership of Buch.
Hindenburg Report: Dhaval Buch’s Entry In Blackstone
In the span from April to October of 2019, Blackstone, through its subsidiary Epsilon Bidco Pte Ltd, managed to acquire a majority stake of 75% in Essel Propack Ltd, now renamed as EPL Ltd. The noteworthy acquisition occurred in July 2019. In July 2019, SEBI chief’s hubby Dhaval Buch joined Blackstone as a senior adviser.
“A major chunk of the Blackstone stake (51% of the 75%) was acquired from the Ashok Goel Trust in April 2019. Atul Goel is part of the leadership advisory board of Ashok Goel Trust. The trust continues to hold a significant 7.6% stake in EPL, but is now classified as a public shareholder. On 27 August 2021, Madhabi Puri Buch, as a whole-time member of SEBI, disposed of an insider trading case against Atul Goel and his company, E-city Hi-tech Projects,” The Morning Context said.
This has raised big questions over the recusal claim made by the SEBI chairperson in her statement.