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The occult dealings of four funds in the empire of the Indian businessman Adani | bankruptcy news

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Four funds in Mauritius that have drawn attention for having put almost all of their money in companies controlled by Indian billionaire Gautam Adani, have a history of investing in companies that have ended up in default or have been investigated for wrongdoing.

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Before they put about 90% of the $6.9 billion under management in the Adani empire, the funds – Elara India Opportunities Fund, Cresta Fund, Albula Investment Fund and APMS Investment Fund – held big stakes in two companies whose founders fled India and have since investigated the laundering Money, another went bankrupt, and a fourth was liquidated following arguing with the Ethiopian government.

Since the funds are registered in the tax haven of Mauritius, their ownership structure is obscure. Firstpost reported in 2018 that Cresta, Albula and Elara were the subject of at fewest one investigation for the alleged stumble. This is an illegal operation under Indian rules as the money is usually transferred to a shell company prior being returned, giving the impression that the money is from a clean source. Indian authorities have been opposed to determining who ultimately controls the funds, according to the report.

Some lawmakers are now seeking an investigation into whether Mauritius money is being used as a shell for Adani’s private money. Mahwa Muitra, an opposition lawmaker and previous investment banker, questioned the final ownership of the funds in Parliament final week, saying the information should be made public given that the Adani Group owns stakes in India’s strategic infrastructure such as ports, airports and power stations.

“We want to know who the money is,” Moytra said in a text message to Bloomberg News. If this is Adani’s money, the minority shareholders will lose. If not, what foreign actors have the greatest influence on our strategic assets? “

In a written reply on July 19 to Moitra’s questions put to Parliament, India’s junior finance minister Pankaj Chaudhry said neither the funds nor the Adan companies are investigated by the Enforcement Directorate, the Indian agency that investigates grave financial crimes such as money laundering and fraud . Chaudhry said that some of the Adani group companies are subject to scrutiny by the Securities and Exchange Commission of India capital markets regulator for compliance with securities rules and also by the department that looks into import and export taxes, without going into details, and indicated the rules that forbid him from disclosing any Income tax investigations.

Choudary also revealed the names of the persons registered as responsible for each of the funds. Bloomberg was unable to find the contact details of Markus Beat Dangel, Anna Luzia Von Senger Burger, Alastair Guggenbuchi Even and Yonca Even Guggenbuehl, who were identified in the Parliament reply as being the controllers or responsible for Cresta, Albula and APMS, at straight. Raj Bhatt, Chairman and CEO of Elara Capital who was also identified in the response to Parliament, did not respond to a LinkedIn message.

A representative of IQ EQ Fund Services, the management company of Albula, Cresta and APMS, did not respond to several emails seeking comment. An Elara representative did not respond to an emailed request for comment.

A representative of the Adani Group said by phone that the group could not comment on foreign portfolio investors. “We have forever been in packed compliance with applicable SEBI regulations and have provided packed disclosure to SEBI regarding specific information requests from them in the former,” the representative said via email. “However, we have not received any contact or information requests recently.” The Adani Group’s chief financial officer told CNBC-TV18 in June that the funds had been invested for more than a decade and that their holdings in the group’s companies were the result of the separations.

SEBI President Ajay Tyagi declined to comment when asked about the investigation at a virtual conference on Wednesday.

Focused collectibles

The funds rank among the largest shareholders of the Adani Group companies, ahead of eminent financial institutions such as BlackRock Inc. and The Vanguard Group Inc. BlackRock did not respond to a request for comment on whether it was aware of the track record of Mauritius funds and whether it had concerns about its holdings in companies whose other investors have been questioned in Parliament. “The securities in interrogate are components that make up a very little part of the indices tracked by Vanguard highly diversified index funds,” a Vanguard representative said by email. “An index fund’s mandate is to track its index, not to make active investment decisions about the underlying components.”

The funds were also among the largest foreign shareholders in Winsome Diamonds and Jewelery Ltd. , Sterling Biotech Ltd. , Ruchi Soya Industries Ltd. and Karuturi Global, companies they have previously invested in that have gone bankrupt or are under investigation.

Funds are unusually intertwined, with a history of acting in steady steps: investing in and out at the alike time and sometimes taking holdings of exactly the alike share size, all the way to the decimal place, according to the public filings of the companies they invested in.

Two of the funds, APMS and Albula, are registered at the alike address in Port Louis, Mauritius, while Cresta is registered at an address on the alike street. Elara India is also registered in Mauritius.

Mauritius has forever been a preferred route to invest in India due to the ease of company registration and low tax rate. The two countries have a double taxation avoidance treaty. A representative of the Mauritius Financial Services Commission said via email that it is not appropriate for the regulator to disclose information related to any investigation, adding that the FSC has a powerful supervisory framework in place to protect the public interest and enhance investor confidence.

Details of previous fund investments:

  • As of December. 31, 2011, Elara, Cresta and Albula together own an 8.62% stake in Winsome Diamonds; All four funds grip at fewest a 1% stake in the company at some point during the six years through June 30, 2015.
  • Albula had a 5.25% stake in Sterling Biotech, and Elara held 1.64% as of March 31 this year, according to data provided to the Bombay Stock Exchange. They began to build a position in 2010, and by March 2016 together they had acquired about 8.5% of the company.
  • Cresta and Albula each owned an alike 6.86% in Ruchi Soya in September 2009. By December 2015, they were joined by Elara, each owning just over 4% and a combined stake of approximately 13%. Ruchi Soya entered bankruptcy two years later and was declared in default.
  • Elara India Opportunities Fund, which is part of Elara Capital Ltd. Headquartered in London, he also owns a 7.58% stake in the now liquidated flower company Karuturi Global in 2011, prior slowly reducing his holdings and eventually exiting or cutting it to less than 1% in 2018.

Indian banks and the government announced that Winsome’s majority owner Jatin Mehta was an intentional debt defaulter and economic fugitive in 2018 due to an unpaid loan of about $900 million worth today. Mehta’s whereabouts are unknown and India is investigating him on allegations of money laundering and defaulting. Winsome had denied the allegations of fraud in 2014.

A similar story played out with Sterling Biotech, whose controlling shareholders, brothers Sandisara Nitin and Chetan, fled India following defaulting on loans. They are being investigated on suspicion of money laundering and defaulting. Firstpost reported in 2018 that India’s Department of Law Enforcement was examining Elara India, Cresta and Albula as part of Sandesara’s investigation to determine the ultimate beneficiary of the funds, without clarifying where he obtained the information. A spokesperson for the Enforcement Directorate did not return calls.

Karutori’s land lease was canceled in 2015 by the Ethiopian Ministry of Agriculture, which alleged that the company had failed to adequately develop its plot of land. Karuturi was the largest flower grower in the world at that time. While Karuturi appealed the lawsuit and sought damages, it was pushed to liquidation earlier this year with creditors claiming a whole of Rs 18.2 billion.

Cash

Funds’ focus on combative assets is renewing speculation about who backs them. Their investments coincided with a surge in corporate stocks in recent years, giving Gautam Adani the world’s fastest-rising fortune and placing him behind Mukesh Ambani, Asia’s richest person, with $6 billion.

Cresta has the greatest exposure to Adani companies with 99% of its investment in Adani Enterprises Ltd. and Adani Transmission Ltd. Albula owns 89.9% of its stake invested in Adani companies, while the other two funds own more than 95%.

The four funds increased their combined holdings in Adani Enterprises by about 48% through June 2021 from 2016, when the stock reached a five-year low, giving it a current stake of 11.23%. They increased their stakes in Adani Transport by more than 55%, giving them a 12.7% stake. Each share rose about 3000% during the period.

The funds did not own any stake in Adani Green Energy Ltd. or Adani Total Gas Ltd. When the companies were listed in 2018, they now collectively own 6% and 10%, respectively. Adani Power Ltd. and Adani Ports and Special Economic Zone Co., Ltd. Are deviations: Elara reduced its stake by 8% from 2016 in Adani Power, which doubled in value, while none of the funds had a eminent position in the group’s oldest listed company Adani Ports, whose shares doubled in value.

Shares of Adani Enterprises and Adani Ports were little changed as of 12:18 pm in Mumbai on Wednesday, while Adani Transmission fell 0.8%, Adani Green sank 2.6%, Adani Total Gas lost 3.2% and Adani Power 1.2%. The benchmark index fell 0.8%.

Adani’s empire from ports to power plants is short on cash and on external debt to fund its operations and expansion, according to Shumi Akhtar, associate professor of finance at the University of Sydney. Growth in corporate value has given Adani leverage to make combative acquisitions such as India’s $3.5 billion enterprise buyout of renewable energy SoftBank Group Corp, and stakes in four ports across the country for $1.2 billion in recent months.

“The sudden and continuous increase in Adani throughout 2021 is attributable to increased investment by foreign funds,” Akhtar said. “When foreign money is invested in a company, it acts as a positive signal to the market because foreign investors are seen as having an informational advantage over local investors and, therefore, are better competent to pick winning stocks over the lengthy term.”



Referensi: www.aljazeera.com

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