'Kotak created offshore fund'

The US short-seller accuses Sebi of shielding Kotak that created an off shore fund to benefi t an unnamed investor to profi t from a plunge in Adani shares after its damning report in January 2023

Billionaire banker Uday Kotak founded bank and brokerage created and oversaw an offshore fund used by an unnamed investor to profit from a plunge in Adani shares that followed a damning Hindenburg report, the US short-seller said.

Hindenburg Research, which had in a January 2023 report alleged stock market manipulations and accounting fraud at the Adani group, said it has received a show cause notice from the Indian markets regulator Securities and Exchange Board of India’s (Sebi) over gains made from betting on the conglomerate’s shares.

The US short-seller said it had disclosed that it had bets against the group, adding that its gains were only over USD 4 million.

While Kotak Mahindra Investments Ltd (KMIL) -- the asset management company is said to have created the offshore fund - stated that Hindenburg was “never” its client, Sebi’s show cause notice cited chats between Kingdon Capital - a client of the US short-seller who was privy to the report prior to its release - and Kotak fund executives.