Kotak Mahindra International Limited (KMIL), a subsidiary of Kotak Mahindra Bank, has issued a clarification regarding the statements made by short-seller Hindenburg Research about the bank’s involvement in the Adani saga.
In its response to a show-cause notice from the Securities and Exchange Board of India (SEBI), Hindenburg claimed that a Mauritius-registered unit of Kotak Mahindra Bank had created and overseen an offshore fund structure used by an unnamed investor to profit from the plunge in Adani’s share prices following Hindenburg’s report.
However, KMIL has unequivocally stated that Hindenburg Research has never been a client or investor in their fund, K-India Opportunities Fund Ltd. (KIOF). The company stressed that KIOF follows strict Know Your Customer (KYC) procedures when onboarding new clients, and all investments are made in accordance with applicable laws.
Furthermore, KMIL said that the fund was not aware that Hindenburg was a partner of any of its investors, and the fund’s investor has confirmed that the investments were made as a principal and not on behalf of any other person.
Kotak Mahindra Bank’s founder, Uday Kotak, who previously led SEBI’s 2017 Committee on Corporate Governance, was also mentioned by Hindenburg in its criticism of SEBI’s lack of scrutiny on the bank. However, KMIL has stated that it has cooperated with regulators in relation to its operations and will continue to do so.
The clarification from KMIL comes as Kotak Bank’s shares fell by up to 4% following the allegations made by Hindenburg. The short-seller’s claims have added further pressure on the bank, which has underperformed the broader market in recent years.
Overall, Kotak Mahindra Bank has firmly denied any involvement in the Adani-Hindenburg saga, stating that Hindenburg has never been a client or investor in their fund. The bank’s response aims to address the allegations and protect its reputation amid the ongoing scrutiny.