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Key Highlights
- An account freeze means the funds would not be able to sell any of the existing securities nor buy any new securities.
- All these three entities are registered at the same address in Port Louis and do not have websites.
- The total market capitalisation of Adani Group was Rs 9.5 lakh crore on Friday, making chairman Gautam Adani the second richest man in Asia.
New Delhi: National Securities Depository Ltd (NSDL) has frozen the accounts of three Foreign Portfolio Investors (FPI) — Albula Investment Fund, Cresta Fund and APMS Investment Fund — which together own over Rs 43,500 crore worth of shares in four Adani Group companies-Adani Enterprises, Adani Green Energy, Adani Transmission, Adani Total Gas. As per the depository’s website, these accounts were frozen on or before May 31.
Although the reason behind this freeze is not known yet, a report in the Economic Times citing top officials at custodian banks and law firms handling foreign investors mentioned that this could be because of insufficient disclosure of information regarding beneficial ownership as per the Prevention of Money Laundering Act (PMLA).
“The freeze could be because of inadequate beneficial ownership documentation,” the publication quoted a senior official with a custodian as saying. “Custodians typically warn their clients before such action but if the fund doesn’t respond or fails to comply, accounts can be frozen.”
An account freeze means the funds would not be able to sell any of the existing securities nor buy any new securities.
The three funds are registered with the Sebi as foreign portfolio investors (FPIs) and are based out of Mauritius.
As per the business daily, all these three entities are registered at the same address in Port Louis and do not have websites. These funds together hold 6.82% in Adani Enterprises, 8.03% in Adani Transmission, 5.92% in Adani Total Gas and 3.58% in Adani Green. Adani Group has six listed companies. The other two are Adani Ports and Adani Power.
Worth mentioning here is that Sebi had revamped the know your customer (KYC) documentation for FPIs in line with PMLA in 2019. Funds were given time till 2020 to comply with the new norms, failing which their demat accounts would be frozen. Under the new rules, FPIs were required to submit few additional details including disclosures on common ownership and personal details of key employees of the fund such as fund managers.
Also, Sebi is reportedly investigating whether there has been price manipulation in Adani Group stocks, which have gained between 200% and 1000% in the past one year.
“Sebi initiated a probe in 2020 and the investigation is still ongoing,” the business daily quoted a person familiar with the matter as saying. Sebi did not respond to ET’s query on the matter.
In the past one year, Adani Transmission shares have rallied by 669%, Adani Total Gas shares have advanced by 349%, Adani Enterprises shares have soared 972% and Adani Green has gained 254%. Adani Ports and Adani Power have advanced 147% and 295%, respectively, in this period.
The total market capitalisation of Adani Group was Rs 9.5 lakh crore on Friday, making chairman Gautam Adani the second richest man in Asia.
The promoter group owns 74.92% in Adani Transmission, 74.92% in Adani Enterprises, 74.80% in Adani Total Gas, and 56.29% in Adani Green. The relatively low free float of the group stocks has been a subject of discussion and comment in market circles.
