Adani-Hindenburg saga: Have side roles come to light?

livemint.com:

The list of dramatis personae in the drama that unfolded after Hindenburg’s report of 24 January 2023 on the Adani Group has grown. Online searches for ‘Kingdon Capital Management’ and ‘Kotak India Opportunities Fund Class F’ surged this week on news of the American short-seller’s reaction to a show-cause notice sent by the Securities and Exchange Board of India (Sebi).

The market regulator had dubbed Hindenburg’s report sensationalist, asking it to explain its allegedly unfair efforts to profit from a crash in Adani stocks that followed its allegations of fraud, stock manipulation and more, all of which were denied by Adani even as the market value of its listed firms shrank. Kingdon, a US-based hedge fund, was named by Sebi’s notice as Hindenburg’s sole investor.

Its role? It began betting against Adani shares a fortnight before that report was published. In its public response, Hindenburg accepted Kingdon as an “investor partner," but sought to highlight the role played by Kotak Mahindra Bank in setting up an offshore fund—a ‘Class F’ spinoff of an existing fund—that was used by the hedge fund for acts of short-selling under Sebi’s scanner.

This has dragged yet another name into a story that has kept market watchers agog for over 17 months. Do these actors merit a spotlight in the long arc of the Adani-Hindenburg saga? To distance itself from controversy, Kotak has denied fore-knowledge of Kingdon’s link with Hindenburg and of the latter’s report.

The bank said it did not know that the US hedge fund would act on the basis of price-sensitive information, given that it had confirmed it would operate solely by what was publicly known. Kotak’s Class F unit was a shell company registered in March 2022 and bought by Kingdon