by Indian billionaire Gautam Adani has promised to improve oversight over the private family businesses that control his business empire after it was attacked by a short seller, according to two people with direct knowledge of the discussions.
Among the changes, the Adani Group founder, 60, had told advisers he intended to appoint a financial controller to oversee his various trusts and other private companies, the people said, who declined to be identified because the talks are confidential .
“The governance structure of the family office will be more like a public company after this episode,” one of the people said. “Mr. Adani decided that.”
The other person said Adani suggested creating a board and hiring “another Robbie”, a reference to the group’s chief financial officer, Jugeshinder “Robbie” Singh, to oversee the family side of the business.
The plan aims to ease investor concerns after New York-based Hindenburg Research claimed in a report last month that Adani artificially inflated its market cap. The short seller also criticized the “maze” of Adani private companies and family trusts that control the conglomerate.
The claims, which Adani has denied, have slashed the group’s market value by $120 billion and prompted a $1.1 billion margin call on a loan. Adani Enterprises, the group’s largest publicly traded company, has fallen 50 percent since the Hindenburg report was published on Jan. 24.
The family trusts and related companies came under scrutiny after the Hindenburg report raised more than a dozen questions related to the businesses of Adani’s relatives, while also pointing out that some funds owning shares in Adani companies were secretly owned by be controlled by the family.
Adani, which denied all allegations of wrongdoing in a more than 400-page counter-notification, said it disclosed all related-party transactions. But last week index provider MSCI announced that it was reviewing the free float size of Adani stocks in its India index and reducing some of their weightings.
Adani has not publicly commented on the structure of his family office. The Adani Group declined to comment on possible governance changes.
The Adani family trusts and related parties, including several Mauritius-based funds, are collectively the majority shareholders of the publicly traded companies in the sprawling infrastructure empire and are known in India as the ‘Promoter Group’.
The promoter group’s holdings included 72.6 percent of Adani Enterprises at the end of last year; 65 percent of Adani Ports and Special Economic Zone (Apsez), the logistics unit; and 74.97 percent of the electricity company Adani Power. In India, promoters are not allowed to own more than 75 percent of a listed company.
Shares in the Adani Group companies fell again on Monday after Bloomberg News reported that the group would cut its revenue growth targets. An Adani spokesman issued a denial.
Adani Enterprises fell 7.6 percent in Monday trade, while Apsez fell 5.4 percent, according to data from the National Stock Exchange. Renewable energy unit Adani Green Energy lost 5 percent on the day, as did thermal power generator Adani Power.
Additional reporting by Anjli Raval in London
