Kotak Mahindra International Limited (KMIL) has stated that hedge fund Kingdon Capital never disclosed any relationship with Hindenburg. Photo: Bloomberg
Kotak Mahindra International Limited (KMIL) has stated that hedge fund Kingdon Capital never disclosed any relationship with Hindenburg, nor did it have prior knowledge of the publication of the Hindenburg report, which triggered a fall in shares of Adani group companies.
“KMIL was informed by Kingdon that the transactions were made on a principal basis, i.e. for themselves. Kingdon never disclosed any relationship with Hindenburg nor that they were acting on the basis of any price-sensitive information. In fact, they expressly confirmed that any advice from Kingdon to invest would be based purely on public information. Neither the Fund nor KMIL was aware that Kingdon entities, which include a US Securities and Exchange Commission registered investment advisor, in respect of whom Know Your Customer as per law was duly performed, had any association with Hindenburg,” said Kotak Mahindra Bank in a stock exchange filing on Tuesday.
Mark Kingdon-led Kingdon Capital’s investment arm, Kingdon Offshore Master Fund, used K-India Opportunities Fund (KIOF), a Mauritius-based, Securities and Exchange Board of India (Sebi)-registered foreign portfolio investor, to build short positions in Adani Enterprises.
Market regulator Sebi has issued show cause notices to six entities, including Hindenburg, Kingdon, and KIOF, for allegedly colluding to use non-public information to build short positions against the Adani group.
According to the Sebi notice, Kingdon, through KIOF, built aggressive short positions ahead of the release of the scathing report by Hindenburg Research on January 25, 2023. Later, it squared off all positions after the publication of the report, netting a “significant” profit of Rs 183 crore.
“The Fund and KMIL had no prior knowledge of the publication of the aforesaid Hindenburg report. We deny any allegation of being aware of such a report or acting in collusion in any manner with Kingdon or Hindenburg,” Kotak Mahindra Bank has said.
Sebi has given a 21-day period to respond to the show cause notice, which was issued on June 26.
“We are legally advised that the Fund acted in full compliance with its obligations under law as well as to its investors. The Fund extended full cooperation to Sebi in its investigation and has shared all relevant facts. The Fund will present its case and bona fides as part of the show cause proceedings that have been initiated,” it added.
(Disclaimer: Entities controlled by the Kotak family have a significant holding in Business Standard Pvt Ltd)
First Published: Jul 03 2024 | 11:15 AM IST