At a time when Gautam Adani has already fallen from 3rd to 29th on the world's richest people list and the shares and market value of Adani group are bleeding heavily, a report by Bloomberg has put the limelight on the billionaire's older brother, Vinod Adani.
Dubai-based Vinod Shantilal Adani was last year?named the richest NRI and?sixth richest Indian?overall with a total wealth of?Rs 1,69,000 crore, as per IIFL Wealth Hurun India Rich list 2022.
Last year in August, as the?Adani Group neared the completion of its $10.5 billion purchase of two cement businesses, the conglomerate and its banks had put out some particularly complicated filings.??
Buried in an 85-page document was a diagram of seven unlisted firms registered in the British Virgin Islands, Mauritius and Dubai.?But the ultimate beneficiary of the seven entities wasn¡¯t listed as the group¡¯s public face and chairman, Gautam Adani.?
Instead, the filings said their beneficial owners were his older brother, Vinod, and Vinod¡¯s wife Ranjanben, as per a Bloomberg report.
Neither Vinod nor his wife Ranjanben holds managerial positions in any listed Adani companies, and they aren¡¯t among the top executives listed on the Adani group's website.?
Yet, the appearance of their names in connection with the group¡¯s largest-ever acquisition suggests the influence that Adani¡¯s little-known brother wields in the sprawling empire ¡ª as well as the family¡¯s style of using a maze of small companies when doing big business.?
In recent weeks, Vinod Adani, who has worked out of Dubai for years and is described in filings as a Cypriot national ¡ª has come into the international spotlight after US-based short seller Hindenburg Research named him prominently in its scathing report on the Adani Group that fueled a rout of more than $140 billion in its shares.?
Vinod is a billionaire via his shareholdings in listed Adani Group?companies.?Still, he lives a largely quiet life in Dubai, people familiar with the matter said. A filing in Cyprus puts his age at 74.? ?
Also Read:?Meet Nathan Anderson, The Man Behind?Hindenburg?Report
¡°Vinod Adani, through several close associates, manages a vast labyrinth of offshore shell entities,¡± the Hindenburg research report had said last month, identifying entities in Mauritius, Cyprus, the United Arab Emirates, Singapore, and several Caribbean Islands. These entities ¡°regularly and surreptitiously transact with Adani,¡± it said. Hindenburg didn¡¯t delve into the details of the cement acquisition.?
The Adani Group has published a 413-page reply denying all of Hindenburg¡¯s allegations.?
Staffers at Vinod¡¯s Dubai offices directed requests for comment to the conglomerate¡¯s headquarters in India.??¡°Vinod Adani does not hold any managerial position in any Adani listed entities or their subsidiaries and has no role in their day-to-day affairs,¡± an Adani Group spokesperson said in response to a detailed set of questions sent by Bloomberg. ¡°These questions are of no relevance, and we cannot comment on the business dealings and transactions of Mr Vinod Adani.¡±?
Even though Vinod Adani doesn¡¯t hold any formal positions or participate in daily operations, Gautam Adani's older brother is a key negotiator for the Adani Group when it¡¯s raising funds from international markets and is involved in planning the group¡¯s strategic direction, a person familiar with the matter said. A close confidant of Gautam, Vinod likes to keep a low profile and deals directly with family members, the person said. The family doesn¡¯t believe it has done anything improper with business structures involving Vinod, according to the person.?
Still, the Adani family plans to look more closely at some of the entities it has built to see how best to structure them going forward in order to reassure investors, the person said, as per the Bloomberg report.
The network of small firms built by the Adani dynasty offers one of the starkest reminders yet of how complex family-run conglomerates can be in India, which is now one of the world¡¯s fastest-growing economies. While many companies have hired professional managers, others are still dominated by familial ties that can make it harder for banks and investors to fully know whom they are doing business with, where the money is flowing and what regulatory minefields might loom.?
The Adani Group is a vast conglomerate with listed and unlisted subsidiaries doing business in everything from ports to power, with a reach spanning from India to Africa and Australia. Several debt filings include Vinod as a key figure within the conglomerate, saying the Adani Group should be understood to mean Vinod, Gautam and another brother Rajesh, who is the managing director, as well as other entities such as a family trust.?
R.N. Bhaskar, the author of a new biography on Gautam Adani said ¡°all overseas transactions are monitored closely by Vinod,¡± but noted that he knew little else about Vinod.?
In the days when Gautam was a student and stayed with Vinod, he considered him a father figure and Vinod was his official guardian, Bhaskar said. ¡°Today, they are more or less equals. I have met them at a social gathering, and I found the chemistry warm and affable.¡±
Last year, when the Adani Group bought Swiss giant Holcim AG¡¯s cement assets in India, the deal for Ambuja Cements Ltd. and ACC Ltd. was completed via a Mauritius-based entity called Endeavour Trade and Investment. Indian regulators approved the open offer.??
At the address listed for Endeavour in Mauritius were the offices of Amicorp, an outside company that provides legal and administrative services to corporations. Hindenburg alleges in its report that Amicorp has worked widely to help the Adani Group to build a network of offshore entities, as per Bloomberg report.
Alex Cobham, an economist and chief executive of the UK-based Tax Justice Network said that the multiple layers, the relative lack of transparency of the jurisdictions and the type of entities used for the cement deal pose several risks for investors and regulators.?
¡°These include the risk that timely updates to beneficial ownership are not made; the risk that the complexity allows abuse of tax and regulation in the jurisdictions where real activity takes place,¡± Cobham said. ¡°And, perhaps most relevant here, the risk that investors may be harmed because they are denied the information necessary to value a company accurately.¡±?
In Dubai, other ties between Vinod and Gautam are on show in Jumeirah Lake Towers, a cluster of sleek skyscrapers with views of the waterfront. Popular addresses for financial firms, they are home to businesses belonging to the Adani Group as well as others to Vinod.?
On the 36th floor of one tower is an office with three nameplates outside saying: Emerging Market Investment DMCC, RVG Exim DMCC, and Adani Global Investment DMCC. A staff member said it was Vinod¡¯s family office. On its website, Emerging Market Investment DMCC says Vinod is its promoter, the term used in India for founders and owners.
The three company names are also mentioned in the Hindenburg report as being among dozens of shell entities in offshore tax havens.??
Emerging Market Investment DMCC has played prominently in the back-and-forth between the Adani Group and Hindenburg. Hindenburg said the Vinod firm lent $1 billion to a subsidiary of a listed unit called Adani Power, and questioned the source of those funds.?
The Adani Group said the allegation was ¡°incorrect¡¯ and the money wasn¡¯t lent. In reality, Emerging Market Investment DMCC acquired the unsustainable debt of a power business from lenders for $100, the conglomerate said.?
Shell companies ¡°are part and parcel of the Indian investment scene,¡± said Milan Vaishnav, director of the South Asia Program at the Carnegie Endowment for International Peace. ¡°What caught people¡¯s attention was the number of shell entities involved and the linkages to Gautam Adani¡¯s brother,¡± Vaishnav said about the Hindenburg report.?
Occupying the 27th floor of another building in Jumeirah Lake Towers, are the white and glass-walled offices of Adani Global FZE ¡ª a commodity distributor that¡¯s part of the Adani Group. The biggest cabin in this office is used by Vinod, a sign of respect granted to an older family member, said one person familiar with the matter, who asked not to be named because they weren¡¯t authorized to speak publicly. Vinod spends two or three hours in this office daily but doesn¡¯t get involved in the day-to-day operations, the person said.
Also Read:?How?Adani?Group Has Mapped Its Comeback Strategy
Vinod Shantilal Adani, like his brother Gautam, was born into a family of a small textile merchant from the Western Indian state of Gujarat. After starting his career running power looms for a business in Mumbai in 1976, Vinod expanded his commodities portfolio to Singapore, according to advertorials published about him in the Indian press seven years ago.?
Vinod moved to Singapore briefly before relocating to Dubai where he made his fortune in trading sugar, oil, aluminum, copper and iron scrap, the media reports said. The billionaire is a follower of the Jain religion that emphasizes vegetarianism and non-violence.
Vinod suffered his own hit as the value of his shares held through Emerging Market Investment DMCC dropped. Worth $1.4 billion before the report, Vinod¡¯s holdings are now valued at about $1 billion, according to the Bloomberg Billionaires Index.
For the latest and interesting financial news, keep reading Indiatimes Worth.?Click here.