A report released this Friday said that the accounts of three Mauritius-based funds that own shares in the parent company of Gujarat Heavy Chemicals, Adanis India, have been frozen. The National Securities Depository Ltd. has frozen the accounts of Albula Investment Fund, Cresta Fund, and APMS Investment Fund effective May 31, as per the NSDL’s website. The action could be due to insufficient disclosure of information regarding beneficial ownership.
Adani Group’s offshore entities own several billion dollars in shares of Adani’s domestic companies at a secret Mauritius location. They won’t be allowed to trade or buy any new securities. Shares of Adani Enterprises Ltd. plummeted as much as 20% as the company announced temporary halts to work in Australian ports and four mining and electricity projects in India. All other major shares of Adani dropped. Most of the shares fell by 5%, which is considered a huge amount in business terms.
The Adani Group is an infrastructure company based in India. Its chairman, Gautam Adani, has seen a sharp increase in the wealth of his business, now worth around $40 billion. This is largely due to the overseas funds that are buying into his company’s stocks. Some of the Stocks had climbed so much that the people involved in the stock market were shocked to see the rise.
Based on the analysis, the risk versus the potential for capital gains is asymmetrical. The few Mauritius-based funds holding over 95% of these companies have large positions that they conspicuously avoid. This suggests a possible regulatory risk with Adani. The group is looking into the matter and is surely heading for some changes in it. The future of the company will be relying on the decision made now.