London-based investment firm Elara Capital is reported to have connections to the Adani Group, and the Indian conglomerate itself is being watched by the Financial Conduct Authority (FCA) in the UK, Financial News reports.
Although the allegations mainly focus on group companies outside the UK, the FCA is investigating possible UK connections around Elara, according to sources familiar with the situation who spoke to Financial News.
A report by US-based activist short-seller firm Hindenburg Research claims London-based Elara Capital “almost exclusively owns Adani Group shares” in some of its funds and has further ties to Adani.
The report, released on January 24, triggered a continued stock slide after accusing Adani of accounting fraud and stock manipulation.
The FCA is investigating possible links to Elara in the UK, people familiar with the matter told Financial News, although the allegations mainly focus on group entities outside the UK, the people said.
As former UK Prime Minister Boris Johnson’s brother Jo steps down from his board at the company, Elara is being investigated by the FCA. On February 1, Johnson announced his resignation as Adani’s stock plunged.
Elara includes an entity authorized by the FCA in the UK, as well as entities domiciled and regulated in India and Mauritius.
Raj Bhatt, the CEO and Director of Elara, founded the company in 2002 with the primary goal of raising funds for Indian companies. Additional Elara Capital locations include Singapore, Mauritius, New York, Ahmedabad and Mumbai.
On its website, it lists asset management, sales and trading, research and analysis, and investment banking as some of its services.
How is Elara Capital connected to Adani?
Hindenburg’s report alleged that Elara Capital India, a subsidiary of the UK firm, had helped the Adani group manipulate the share prices of its companies and had been part of large-scale accounting fraud by the conglomerate.
He called Elara Capital one of Adani’s “stock parking entities” meant to stay under the radar of Indian authorities.
The other underwriter, Indian brokerage firm Monarch Networth Capital, is reportedly partially owned by Adani Properties, according to Hindenburg.
A Forbes report published on February 1 suggested that both Elara and Monarch may have also purchased Adani FPO.
Elara Capital also has offices in New York, Ahmedabad, Mumbai, Mauritius and Singapore. Its website says that its services include investment banking, research and analysis, sales and trading, and asset management.
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