📷 Image Credits: The Times of India
Kotak Mahindra Bank, a prominent Indian financial institution, has found itself in hot water as its name surfaces in the Adani-Hindenburg controversy. The controversy has caused a dip in the shares of Kotak Mahindra Bank, further adding pressure on the institution amidst these revelations. Over the last three years, Kotak Mahindra Bank’s shares have only seen a modest 4% increase, highlighting the significance of these recent events.
The Securities and Exchange Board of India (SEBI) conducted an investigation into Kotak Mahindra Bank’s subsidiary, Kotak Mahindra International Ltd, which served as the investment manager for trades made by the K India Opportunities Fund Class F, a registered Foreign Portfolio Investor (FPI). These trades involved futures of Adani Enterprises prior to the publication of a report by Hindenburg Research. The investigation revealed that Kingdon Capital was the investment advisor to Kotak Mahindra International Ltd.
Furthermore, Kotak Mahindra Bank clarified that the K- India Opportunities Fund is a SEBI registered Foreign Portfolio Investor regulated by the Financial Services Commission of Mauritius. The Fund, established in 2013, operates to facilitate foreign investments in India while adhering to all applicable laws and regulations. Kotak Mahindra Bank emphasized its cooperation with regulators and asserted that Hindenburg was never a client of the firm.
The notice issued by SEBI to Hindenburg Research detailed the trading activities involving the K India Opportunities Fund, which took a short position in Adani Enterprises futures based on advice from Kingdon Capital. Post the publication of the report by Hindenburg Research, the fund made significant profits by squaring off its short position, raising questions about the nature of the trading and the profit-sharing agreement between Kingdon Capital and Hindenburg Research.
In light of these developments, Kotak Bank’s shares experienced a decline, sparking investor concerns. The stock fell by 2.2% initially but later recovered to trade 2.1% lower at Rs 1,769.50 per share. Analysts tracking the company maintain varying recommendations, with an average consensus price target suggesting a potential upside of 5.8%. This controversy has put Kotak Mahindra Bank in the spotlight, raising questions about its involvement in the Adani-Hindenburg saga.
