US-based short seller Hindenburg Research, which has been targeting the Adani Group in India, has reportedly shared an ‘advance copy’ with one of their clients two months prior to the publication of their report on Adani, the 46-page notice by SEBI said. The report was amplified by many politicians and media portals in India, leading to a massive route in Adani stocks in 2023.
As per reports, Hindenburg had shared its report on Adani with their client two months prior to publication, enabling them to obtain ‘unfair’ profits from the stock price movements in a brokered deal using the report. The SEBI notice details how Kingdon Capital, led by New York-based hedge fund manager Mark Kingdon, and a broker linked to Kotak Mahindra Bank profited significantly from the nearly 150 billion dollar routing the 10 companies under Adani Groups faced in the stock market.
The SEBI notice highlights that Hindenburg Research used ‘non-public’ and misleading information about the Adani Group to create a panic in the Indian stock market.
As per reports, Hindenburg’s response to the SEBI notice has acknowledged the prior sharing of information with the said broker but it has claimed that SEBI is trying to ‘silent’ them for exposing Adani. Hindenburg’s response admits that the vehicle used to bet against Adani Enterprises Ltd belonged to Kotak Mahindra International Ltd, a Mauritious-based firm owned by Kotak Mahindra Ltd.
The fund by KMIL placed bets on Adani Enterprises on behalf of Mark Kingdon’s Kingdon Capital Management. SEBI’s notice to Hindenburg also includes time-stamped chats between a Kingdon employee and traders from KMIL, details the sale of future contracts in Adani Enterprises.
‘Kingdom never disclosed that they are acting on Hindenburg’s information’: says Kotak Mahindra Bank
Meanwhile the Kotak Mahindra Bank Ltd has stated that they were not aware of Kingdon Capital’s contacts with Hindenburg, or the fact that Kingdon was already in possession of prior information regarding the report on Adani. “Kingdon never disclosed they had any relationship with Hindenburg, or that they were acting on the basis of any price sensitive information (on Adani Group)”, Kotak Mahindra has stated.
‘Hindenburg and Kingdon partnered to target Adani’
Hindenburg’s response to SEBI has disclosed that Hindenburg and Kingdon Capital partnered to orchestrate a strategic move against Adani Group and benefitted from short-selling Adani stocks.
On Kingdon Capital’s recommendation, Kotak Mahindra Bank created an offshore fund named the Kingdon India Opportunity Fund. It served as a critical vehicle for Kingdon Capital to engage in short selling of Adani Group’s shares. The creation and utilisation of this fund was part of sophisticated strategies employed by Kingdon Capital to leverage financial markets to their advantage.
As pointed out by Mahesh Jethmalani, Kingdon India Opportunity Fund took large short positions in Adani shares through the Mauritius route before the Hindenburg report was published. The Rajya Sabha MP and Supreme Court advocate disclosed that funds amounting to $40 million were provided by Kingdon’s Master Fund, owned by the Kingdon family.
Jethmalani has added that Hindenburg was hired by Mark Kingdon specifically to target Adani.
Who is Mark Kingdon?
Mark Kingdon is the founder and owner of Kingdon Capital. He is a prominent figure in the investment community. Kingdon’s background and connections add layers of complexity to the story that has been unfolding for the last week. Anla Cheng, a Chinese American woman, is the wife of Mark Kingdon. She is a senior partner at the private equity firm Sino-Century and the founder of the New York-based news platform SupChina. Cheng has been cited as an influential lobbyist for Chinese interests in USA. There are speculations that the attack on Adani could have stemmed from the fact that Adani Group has been outbidding Chinese firms in key international projects, such as the Haifa Port deal in Israel.
