The Hindenburg report alleged that SEBI chairperson Madhabi Puri Buch had “stakes in both the murky offshore funds used in the Adani money siphoning scandal”.

Say the Hindenburg Report: In January last year, US-based short-seller Hindenburg Research released a report accusing the Adani group of engaging in investment, stock manipulation and undisclosed related party transactions. Hindenburg's allegations jolted India's stock market and Adani stocks fell sharply. Now, the US-based short-seller has again come out with a report that has raised questions on India's capital market regulator, the Securities and Exchange Board of India (SEBI). In a recently published report, Hindenburg has launched a direct attack on Sebi chairperson Madhavi Puri Buch, alleging that the regulatory authority is turning a blind eye to an allegedly unknown network of shell entities linked to the Adani group.

Hindenburg report: SEBI under major question

The Hindenburg report accused SEBI chairperson Madhabi Puri Buch of holding “stakes in both murky offshore funds used in the Adani money siphoning scandal”.

However, Buch has denied the allegations leveled by Hindenburg Research. But many unanswered questions about her relationship with other companies still hover in the sky.

A recent Hindenburg report has fueled some questions about Madhabi Puri Buch, which has promoted the idea of ​​real estate investment trusts as an attractive investment class. It is interesting to note that she has done so without openly admitting that her husband Dhaval Butch currently works as a consultant for Blackstone Inc. Interestingly, this company sponsors half of the listed REITs in India.

The SEBI chairperson's close ties with US-based private equity firm Blackstone have raised concerns over a potential conflict of interest, The Morning Context reported.

“Blackstone has a huge investment in India. It is the promoter of many companies in India. That [Buch] They have pulled themselves out of Blackstone affairs, not enough of what they are investing in India,” The Morning Context quoted a senior fund manager as saying, requesting anonymity.

Blackstone's involvement keeps the Hindenburg claims in the spotlight, preventing them from being swept under the news carpet. Due to this persistent problem, SEBI is bound to clear the hurdles of its chairman, who held a prominent position in the corporate world before stepping into regulatory duties. This prior role may lead to a potential conflict of interest.

Hindenburg Report: Blackstone has significant stake in major Indian companies

Capital market insiders are expressing their concerns about Madhabi Puri Buch's interconnected network of potential vested interests jeopardizing her role as regulator. Although Buch has asserted aloofness from matters related to Blackstone, one should note, Blackstone has significant stakes in several leading institutions such as Indiabulls Housing Finance (rebranded as Samman Capital), Aadhaar Housing Finance, ASK Investment Manager, Care Hospitals and Mphasis. These acquisitions by the firm's subsidiaries have been duly noted by The Morning Context.

Currently, we are left with a question mark as to whether Butch has deliberately chosen not to involve himself in any matters related to the companies that Blackstone owns. It is also uncertain how many Blackstone-related companies are featured on her list of recusals. At the moment, neither SEBI nor BUCH has made this list public.

In February last year, SEBI cleared the IPO of Blackstone-controlled Aadhaar Housing Finance. Interestingly, this happened under the leadership of Butch.

Hindenburg Report: Dhaval Buch's entry into Blackstone

Between April and October of 2019, Blackstone, through its subsidiary Epsilon Bidco Pte Ltd, acquired a majority stake of 75% in Essel Propack Ltd, now renamed EPL Ltd. The notable acquisition took place in July 2019. In July 2019, SEBI chief's husband Dhaval Butch joined Blackstone as a senior consultant.

“Majority stake in Blackstone (51% out of 75%) was acquired by Ashok Goyal Trust in April 2019. Atul Goyal is part of the Ashok Goyal Trust's Leadership Advisory Board. The trust holds a significant 7.6% stake in EPL, but is now classified as a public shareholder. On August 27, 2021, Madhabi Puri Buch, as a whole-time member of SEBI, disposed of an insider trading case against Atul Goyal and his company, E-City Hi-Tech Projects,” The Morning Context said.

This has raised major questions on the resourcing claim made by the SEBI Chairperson in her statement.