Shock to Gautam Adani! Share freeze worth Rs 43,500 crore

National Securities Depository Ltd has frozen the accounts of three foreign funds (FPIs). He has shares worth more than Rs 43,500 crore in Adani Group companies

Shock to Gautam Adani! Share freeze worth Rs 43,500 crore

Highlights

• National Securities Depository Limited freezes accounts of three foreign funds
• They have shares worth more than Rs 43,500 crore in Adani Group companies
• These funds can neither sell any existing securities nor buy new ones
• There has been a huge jump in the shares of Adani Group companies in the last one year

There is no good news for the Adani Group, headed by Gautam Adani, India's and Asia's second-richest person. National Securities Depository Ltd has frozen the accounts of three foreign funds Albula Investment Fund, Cresta Fund and APMS Investment Fund. They have shares worth more than Rs 43,500 crore in 4 companies of the Adani Group. According to the NSDL website, these accounts were frozen on or before May 31.

All three have 6.82 percent stake in Adani Enterprises, 8.03 percent in Adani Transmission, 5.92 percent in Adani Total Gas and 3.58 percent in Adani Green. According to law firms handling custodian banks and foreign investors, these foreign funds may not have complete information about the beneficial ownership due to which their accounts have been frozen. Under the Prevention of Money Laundering Act (PMLA), it is necessary to give complete information about Beneficial Ownership.

What does account freeze mean?

An official said that usually custodians warn their clients about such action, but if the fund does not respond to this or does not follow it, then the accounts can be frozen. Freezing the account means that the fund cannot sell any existing securities or buy new ones.

Emails sent to NSDL, SEBI and Adani Group in this regard did not elicit any response. Albula Investment Fund, Cresta Fund and APMS Investment Fund could not be contacted. These three funds are registered with SEBI as Foreign Portfolio Investors and operate out of Mauritius. All three are registered at the same address in Port Louis and do not have a website.

Investigating manipulation of share prices

In 2019, the capital markets regulator made KYC documentation for FPIs as per PMLA. The funds were given time to comply with the new rules till 2020. SEBI said that the accounts of funds that do not comply with the new rules will be frozen. According to the new rules, FPIs had to provide some additional information. These included disclosure of common ownership and personal details of key employees such as fund managers.

It is believed that SEBI is also probing the price manipulation of shares of Adani Group companies. In the last one year, the shares of these companies have jumped by 200 to 1000 percent. An expert in the matter said that SEBI had started an investigation in this matter in 2020 which is still going on. SEBI did not respond to queries sent to it in this matter.

Adani Group shares rise

Adani Transmission has gained 669 percent, Adani Total Gas 349 percent, Adani Enterprises 972 percent and Adani Green 254 percent in the last one year. Similarly, the shares of Adani Ports and Adani Power have gained 147 percent and 295 percent respectively. Adani Group's total market cap on Friday stood at Rs 9.5 lakh crore, making the group's chairman Gautam Adani Asia's second-largest rich man. The promoter group holds 74.92 percent in Adani Transmission, 74.92 percent in Adani Enterprises, 74.80 percent in Adani Total Gas and 56.29 percent in Adani Green.