Adani founder signals governance changes to placate investors

Indian billionaire Gautam Adani has promised to improve oversight of the private family companies that control his business empire after it came under attack by a short seller, according to two people with direct knowledge of the discussions.

Among the changes, the 60-year-old founder of the Adani Group had told advisers he intended to appoint a financial controller to oversee his various trusts and other privately held companies, said the people, who declined to be identified because the talks are confidential.

“The governance structure of the family office will become more like a public company, post this episode,” said one of the people. “This is what Mr Adani has decided.”

The other person said Adani had suggested creating a board and hiring “another Robbie”, a reference to group chief financial officer Jugeshinder “Robbie” Singh, to oversee the family side of the business.

The plan is designed to address investor concern after New York-based Hindenburg Research alleged in a report last month that Adani had artificially inflated its market capitalisation. The short seller also criticised the “maze” of Adani private companies and family trusts that control the conglomerate.

The claims, which Adani has denied, wiped $120bn from the group’s market value and triggered a margin call on a $1.1bn loan. Shares in Adani Enterprises, the group’s largest listed company, are down 50 per cent since the publication of the Hindenburg report on January 24.

The family trusts and related entities have come under scrutiny after the Hindenburg report raised more than a dozen questions related to dealings by Adani’s relatives, while suggesting some funds that own shares in Adani companies are secretly controlled by the family.

Adani, which denied all allegations of wrongdoing in a more than 400 page rebuttal, said it had disclosed all related party transactions. But last week, index provider MSCI said it was reviewing the size of the free float in Adani stocks in its India index, and cut some of their weightings.

Adani has not commented publicly on the structure of his family office. The Adani Group declined to comment on possible governance changes.

The Adani family trusts and related parties, including several Mauritius-based funds, are collectively the controlling shareholders of the sprawling infrastructure empire’s listed companies, and are known in India as the “promoter group”.

Promoter group holdings included 72.6 per cent of Adani Enterprises as of the end of last year; 65 per cent of Adani Ports and Special Economic Zone (Apsez), the logistics unit; and 74.97 per cent of electricity company Adani Power. In India, promoters are not allowed to own more than 75 per cent of a listed company.

Shares in Adani Group companies slid again on Monday after Bloomberg News reported that the group would cut its revenue growth targets. An Adani spokesperson issued a denial.

Adani Enterprises fell 7.6 per cent in Monday trading, while Apsez dropped 5.4 per cent, according to National Stock Exchange data. Renewables unit Adani Green Energy lost 5 per cent on the day, as did thermal power producer Adani Power.

Additional reporting by Anjli Raval in London