Two of eight offshore funds that were allegedly used to pump hundreds of millions of dollars into the Adani Group were shut after the Securities and Exchange Board of India, or SEBI, initiated an investigation against the conglomerate in 2020, Mint reported on Wednesday.

One more firm is in the process of closing. A total of six such offshore funds have been shut, while one fund remains active, the newspaper reported on the basis of regulatory filings. The details pertaining to one offshore fund were not known.

The closure of the six offshore funds poses a challenge for the SEBI to determine their ultimate beneficiaries.

Five of the six offshore funds are said to be based in Mauritius, while one is based in Bermuda. They are:

  • Global Opportunities Fund (registered on January 6, 2005 in Bermuda, shut on December 12, 2006).
  • Assent Trade and Investment Private Limited (registered on 4 January 2005, turned defunct on 12 December 2006).
  • Lingo Trading and Investment Private Limited (incorporated in December 2009, closed in March 2015).
  • Mid East Ocean Trade and Investment Private Limited (set up in September 2011, closed in August 2022).
  • EM Resurgent Fund (set up in May 2010 and shut down in February 2022).
  • Asia Vision Fund (set up in May 2010 and is in the process of winding up).

In March, after a report by United States-based firm Hindenburg Research accused the Adani Group of stock manipulation, the Supreme Court set up an expert panel to probe possible regulatory failure related to the Adani Group. It also asked SEBI to investigate the allegations against the conglomerate.

When activist and Supreme Court lawyer Prashant Bhushan told the court that SEBI had been investigating the Adani Group since 2016, the regulator dismissed the claim as “factually baseless”.

However, in July 2021, Minister of State for Finance Pankaj Chaudhary had told Parliament that SEBI was looking into some Adani group companies for non-compliance with regulatory regulations.

The expert panel formed by the Supreme Court has reportedly stated in its report that the regulator first began investigating Adani Group companies in October 2020, after receiving complaints in June-July 2020. It also said that identifying the true beneficiaries of the foreign entities was a “humongous task” akin to “a journey without a destination”.

Last week, an investigation by the Organised Crime and Corruption Reporting Project, or OCCRP, had named two associates of the Adani family – Chang Chung-Ling from Taiwan and Nasser Ali Shaban Ahli from the United Arab Emirates – who had made investments in the conglomerate’s stocks through “opaque” investment funds based in Mauritius.

Both Ahli and Chang, the OCCRP alleged, had longtime business ties with the Adani Group, particularly Vinod Adani, the brother of chairman Gautam Adani. Since the two men were associates of the Adani Group, their investments possibly violated Indian stock market rules, which mandate that listed companies have a minimum 25% public shareholding, OCCRP alleged.

A document obtained by the OCCRP, shared with Scroll, also revealed that the SEBI had known about the allegations against Adani Group since 2014.

The OCCRP allegations are significant because they further the claims made by Hindenburg Research in January that the Adani Group used a network of offshore shell entities controlled by Vinod Adani to manipulate the valuation of its stocks. This, in turn, led to an overestimation of its companies’ financial health, according to Hindenburg Research. The Adani Group has rejected the allegations.

On Wednesday, two regulatory experts told Mint that the closure of public funds in a relatively short time is surprising as they typically have longer lifespans.

“There should not be a problem if the fund was wound up less than two years ago, but information regarding the ones that were liquidated before would be difficult to obtain [for SEBI]” an unidentified executive at a Big Four consulting firm told the newspaper.

The executive said that most overseas regulators maintain records of funds for only a limited period of time.