Shares of Adani Group companies fell sharply on June 14 after reports surfaced that the National Securities Depository Ltd (NSDL) froze accounts of the three foreign funds that are among the top stakeholders in the port-to-energy conglomerate. But at least two of the three funds and Adani were at pains to explain that this was not true and the funds were free to invest in Adani stocks.
Yet, the NSDL website showed that Albula Investment Fund, Cresta Fund and APMS Investment Fund showed up in the category of frozen accounts.
Also Read: Why Adani shares fell, why the FPI accounts were frozen and what are Sebi’s KYC rules, explained
What is the true picture?
It is correct that the NSDL froze accounts of the three foreign funds, but that pertains to some specific accounts and happened way back in June 2016. These specific accounts were frozen on orders of the Securities and Exchange Board of India (SEBI) in an unrelated case and have nothing to do with Adani Group companies, a senior NSDL official told Moneycontrol on condition of anonymity.
On Tuesday, Adani Group said in a statement that some demat accounts are in ‘Suspended for Debit’ status due to a SEBI order issued on June 16, 2016.
The fact that a certain entity’s account has been frozen by the regulator or the depository does not imply that all its shares or dealings in the Indian market have been suspended or frozen. These three foreign funds will continue to appear on the list of frozen accounts on the NDSL website till SEBI lifts the order, but they are free to deal in Adani shares.
In opening hours of the markets today, Adani shares traded mixed after losing nearly Rs 54,000 crore in market cap yesterday. On Monday, shares had nosedived after the Economic Times reported that NSDL has frozen the accounts of the three foreign funds, which collectively held Rs 43,500 crore of Adani group shares.
On Monday afternoon, Adani confirmed that the demat accounts of the three foreign funds holding its shares were in ‘active’ status. At least two of the three funds, including APMS Investment Fund, said that NSDL freeze on a specific account had no “relevance to normal FPI [Foreign Portfolio Investor] trading activity.”
The 2016 freeze
The markets regulator had frozen the accounts of the three funds in question in a case related to issuance of global depository receipts (GDRs) by 51 Indian companies, said the NSDL official cited earlier.
The June 16, 2016 order effectively told depositories to freeze beneficiary accounts which would receive certain shares or have received shares involved in the GDR issues.
Although the SEBI order does not expressly name the three funds (it names only the 51 companies which issued GDRs), it was on the basis of that order that NDSL had frozen several fund accounts, said the NSDL official cited earlier. Adani too confirmed that the funds’ accounts were frozen on the basis of this order.
Also Read: NSDL says accounts of foreign funds invested in Adani companies are not frozen
Moneycontrol has sent emails seeking comment to Albula, Cresta and APMS. This copy will be updated when we receive their comments.
“A freeze on account by NSDL has several categories. It is not just limited to KYC rules and NSDL takes action on the direction of SEBI,” a market source added.
The NSDL website has shared data from 2016 onwards on frozen accounts. There are 9,447 entities on the list, including these accounts.
At 10:41 hour, shares of Adani Enterprises were up 0.71 percent and those of Adani Green Energy was down 2.02 percent. Adani Total Gas, Adani Transmission, Adani Power were down 5 percent each while Adani Ports was trading flat at Rs 767.8.