‘Something big soon India’: Hindenburg Research hits at making big revelation involving Indian company

PTC Web Desk: US-based short seller Hindenburg Research has sparked fresh anticipation with a cryptic message hinting at another significant revelation involving an Indian company. The message, posted on Elon Musk-owned X (formerly Twitter) on Saturday morning, simply stated: “Something big soon India.”

This teaser has garnered widespread attention, particularly given Hindenburg’s history of impactful revelations in India. In January 2023, Hindenburg released a damning report targeting the Adani Group, led by billionaire Gautam Adani. The timing of the report, just before Adani Enterprises’ scheduled share sale, had severe repercussions, triggering an $86 billion decline in the market capitalisation of Adani Group’s stocks. The report’s release led to a massive sell-off of the group’s bonds listed abroad, causing significant financial turmoil for the conglomerate.

Something big soon India

— Hindenburg Research (@HindenburgRes) August 10, 2024

Following the Adani controversy, Hindenburg’s activities have been closely monitored, especially regarding its next potential target. In June 2024, the firm once again made headlines when it disclosed that the Securities and Exchange Board of India (SEBI), the country’s capital market regulator, had issued a notice against them, accusing them of violating Indian regulations.

This marked a critical juncture in Hindenburg’s dealings with India, as the firm, for the first time, explicitly identified Kotak Mahindra Bank in its report.

According to Hindenburg, SEBI’s notice, dated June 27, 2024, was “nonsense” and a deliberate attempt to silence and intimidate those who expose corruption and fraud in India. The short seller criticised SEBI for attempting to establish jurisdiction over them while allegedly protecting powerful Indian businessmen. Hindenburg noted that SEBI’s notice conspicuously avoided naming Kotak Mahindra Bank directly, instead referring to the “K-India Opportunities fund” and using the acronym “KMIL” to mask the connection to Kotak.

Hindenburg suggested that SEBI’s omission might be intended to shield Uday Kotak, one of India’s most influential bankers, from scrutiny. The report further alleged that Kotak Mahindra Bank had played a role in facilitating offshore fund structures that Hindenburg’s investor partner used to bet against Adani. This revelation caused a noticeable drop in Kotak Bank’s stock value, which hit its lowest point since June 2024 during early trading sessions following the report.

SEBI’s notice also accused Hindenburg of sharing an advance copy of its Adani Group report with New York hedge fund manager Mark Kingdon two months before its public release. This allegedly allowed Kingdon Capital, which held significant investments in Kotak Mahindra Investments Limited (KMIL), to strategically profit from the market volatility caused by the report. According to SEBI, Kingdon Capital made a $22.25 million profit after establishing short positions worth $43 million in Adani Enterprises Ltd (AEL) before the report was published.

The SEBI notification also included time-stamped conversations between Kingdon Capital personnel and traders linked to Kotak Mahindra Investments Limited, discussing the trading of futures contracts related to Adani Enterprises. These interactions hinted at complex financial dealings between the involved parties.

Kingdon Capital defended its actions, stating it had the legal right to engage in research agreements that allowed it to receive and act upon reports before they were publicly available. Meanwhile, Kotak Mahindra Bank denied any knowledge of Kingdon’s ties to Hindenburg or involvement in the use of sensitive financial information.