MUMBAI: India's Adani group and its banks released some particularly complicated filings in August as the $10.5 billion acquisition of two cement businesses neared completion.
A diagram of seven unlisted businesses registered in Dubai, Mauritius, and the British Virgin Islands was on page 21 of an 85-page document. They were connected to one another, and one of them would buy shares of the cement company on the open market.
However, the billionaire Gautam Adani, the group's public face and chairman, was not listed as the ultimate beneficiary of the seven entities. Instead, the filings stated that his older brother Vinod and Vinod's wife Ranjanben were their beneficial owners.
Neither Vinod nor Ranjanben stand firm on administrative footholds in any recorded Adani organizations, and they aren't among the top leaders recorded on the combination's site. However, Adani's little-known brother's influence in the sprawling empire and the family's style of using a maze of small businesses when doing big business are both implied by the appearance of their names in connection with the group's largest ever acquisition.
Vinod, who has worked out of Dubai for years and is listed in filings as Cypriot, has gained international attention in recent weeks as a result of short seller Hindenburg Research's critical report on the Adani group, which led to a loss of more than $140 billion in its shares.
The report stated, "Vinod Adani, through several close associates, manages a vast labyrinth of offshore shell entities," naming entities in Mauritius, Cyprus, Singapore, the United Arab Emirates, and a number of Caribbean islands. It stated that these organizations "regularly and covertly transact with Adani." Hindenburg did not investigate the specifics of the cement purchase.
In a 413-page response, the Adani group refutes all of Hindenburg's claims.
When contacted for comment, employees at Vinod's Dubai offices referred inquiries to the Indian headquarters of the conglomerate.
In response to a comprehensive set of questions sent by Bloomberg News, an Adani group spokesperson stated, "Vinod Adani does not hold any managerial position in any Adani listed entities or their subsidiaries and has no role in their day-to-day affairs." We are unable to comment on Mr. Vinod Adani's business dealings because these questions are irrelevant.
Requests for comment from Vinod or Ranjanben, who is listed as an interior designer in a Cyprus filing, were not met by the conglomerate.
Complex conglomerate Despite the fact that Vinod does not hold any formal positions and does not participate in daily operations, a person familiar with the situation said that he is involved in planning the group's strategic direction and is a key negotiator for the Adani group when it is raising funds from international markets. According to the person, Vinod, Gautam's close confidant, prefers to keep a low profile and communicates directly with family members. According to the person, the family doesn't think it did anything wrong with Vinod's business structures.
However, in order to reassure investors, the person stated, the Adani family plans to examine some of the entities it has constructed in greater detail.
One of the most stark examples yet of how complicated family-run conglomerates can be in India, one of the world's fastest-growing economies, is the Adani dynasty's network of small businesses. Banks and investors may find it challenging to fully understand who they are doing business with, where the money is flowing, and what regulatory minefields might loom, even though many businesses have hired professional managers. However, others are still dominated by familial ties.
Vinod is a billionaire because he owns shares in companies that are listed in the Adani group. People who are familiar with the situation said that he still leads a relatively quiet life in Dubai. His age is stated in a Cyprus filing as 74.
The Adani group is a huge conglomerate with listed and unlisted subsidiaries that operates in power, ports, and other industries across Africa, Australia, and India. According to a number of debt filings, Vinod is a key figure in the conglomerate. They say that the Adani group includes Vinod, Gautam, another brother Rajesh, who is the managing director, and other entities like a family trust.
The author of a new biography about Gautam, RN Bhaskar, said that "Vinod closely monitors all overseas transactions," but he didn't know much else about Vinod.
According to Bhaskar, when Gautam was a student and lived with Vinod, he considered Vinod to be his official guardian and a father figure. They are practically equal today. I met them at a social event and found their chemistry to be warm and friendly.
Address in Mauritius When the Adani group bought the Indian cement assets of Swiss giant Holcim AG last year, Endeavour Trade and Investment, based in Mauritius, closed the deal for Ambuja Cements Ltd. and ACC Ltd. The open offer was approved by Indian regulators.
The offices of Amicorp, an outside company that provides legal and administrative services to corporations, were located at the address that was listed for Endeavour in Mauritius. In its report, Hindenburg says that Amicorp has done a lot to help the Adani group build a network of offshore businesses. A request for clarification from Amicorp was unanswered.
The multiple layers, relative lack of transparency of the jurisdictions, and type of entities used in the cement deal, according to Alex Cobham, chief executive of the UK-based Tax Justice Network, pose a number of risks for investors and regulators.
"These incorporate the gamble that ideal updates to gainful possession are not made; the possibility that the complexity permits tax and regulation abuse in jurisdictions where actual activity occurs,” Cobham stated. And, perhaps most importantly in this instance, the possibility that investors may suffer harm as a result of being denied the information they require to accurately value a company.
In Dubai, Jumeirah Lake Towers, a collection of sleek skyscrapers with views of the water front, demonstrates Vinod and Gautam's other ties. They are popular addresses for financial firms and are where businesses from Vinod and the Adani group and others are located.
An office with three name plates outside on the 36th floor of one tower reads: RVG Exim DMCC, Adani Global Investment DMCC, and Emerging Market Investment DMCC It was, according to a staff member, Vinod's family office. Vinod is listed as Emerging Market Investment DMCC's promoter, which is the Indian term for founders and owners, on its website.
The Hindenburg report also mentions the three company names as one of dozens of offshore tax haven shell entities.
Developing Business sector Venture DMCC has played conspicuously toward the this way and that between the Adani gathering and Hindenburg. Hindenburg questioned the source of the company's $1 billion loan to a subsidiary of a listed company called Adani Power.
The Adani group claimed that the claim was "incorrect" and denied lending the money. According to the conglomerate, Emerging Market Investment DMCC paid lenders $100 to acquire a power company's unsustainable debt.
According to Milan Vaishnav, director of the South Asia Program at the Carnegie Endowment for International Peace, "shell companies are part and parcel of the Indian investment scene." What grabbed individuals' eye was the quantity of shell elements included and the linkages to Gautam Adani's sibling," Vaishnav said about the Hindenburg report.
The offices of Adani Global FZE, a commodity distributor that is a part of the Adani group, are white and have glass walls. They are located on the 27th floor of another building in Jumeirah Lake Towers. According to a person who is familiar with the situation but asked not to be identified because they were not authorized to speak publicly, Vinod uses the largest cabin in this office as a gesture of respect for an older family member. According to the person, Vinod spends two to three hours a day in this office, but he does not participate in the day-to-day operations.
Like his brother Gautam, Vinod Shantilal Adani was born into a modest textile merchant family in the Western Indian state of Gujarat. According to advertisements that were published about him in the Indian press seven years ago, Vinod expanded his commodities portfolio to Singapore after beginning his career running power looms for a business in Mumbai in 1976.
According to reports in the media, Vinod made his fortune trading sugar, oil, aluminum, copper, and scrap iron before relocating to Dubai. The Jain religion, which places an emphasis on vegetarianism and nonviolence, is practiced by the billionaire.
Stock declines fueled by the Hindenburg report have now wiped out $72.9 billion of Gautam's wealth. As the value of Vinod's shares held through Emerging Market Investment DMCC decreased, Vinod also suffered. Worth $1.4 billion preceding the report, Vinod's property are currently esteemed at about $1 billion, as per the Bloomberg Extremely rich people Record.
The head of a major family-owned business in India, who requested anonymity to discuss one of the country's most powerful tycoons, stated that the allegations against Adani have cast a negative light on the country and, in particular, businesses controlled by a family network.
This individual stated that despite the fact that many businesses have largely professionalized their management in recent years, the allegations against the Adani family run the risk of tarring large portions of the Indian industry.
According to Alice Wang, a portfolio manager at Quaero Capital LLP based in London, family networks can be crucial when starting a business in emerging markets like India.
She stated, "But family structures can become liabilities later." when businesses attempt to institutionalize, expand internationally, or make plans for succession.