Hindenburg, Mark Kingdon Reaped $31.4 Million Profit From Adani Enterprises Short Sell

Hindenburg Research LLC, foreign investor Mark Kingdon and his related entities made profit of around $31.4 million by short selling futures of Adani Enterprises Ltd., show cause notice sent to the short seller by the Indian markets regulator showed.

The SEBI investigation in the short sell revealed that Kingdon's K-India Opportunities Fund – Class F opened a trading account and started trading in the scrip of Adani Enterprises before the release of Hindenburg report.

The FPI (foreign portfolio investment) then squared off these positions in February 2023 making a profit of $22.25 million or Rs 183.24 crore, the SEBI show case notice sahowed. This fund only traded Adani Enterprises on the National Stock Exchange.

Kingdon was originally supposed to share $5.52 million in profit with Hindenburg, but paid only $2.76 million at the end of March 2023, and $1.38 million at the beginning of June 1 2023, after the short seller raised invoices. The FPI held back $1.38 million as it held investments in K India Opportunities Fund. The balance was to be paid once the fund was withdrawn.

Hindenburg Research had taken short positions through ETFs and options on MSCI India Index on Jan. 24, 2023. These positions were subsequently squared off between January and March last year, leading to a profit of around $9.2 million.

As per records from Interactive Brokers LLC, a multinational brokerage firm, the US-based short seller traded in bonds of Adani Group companies—Adani Electricity Mumbai, Adani Green Energy, Adani Ports and SEZ—outside India. It traded in the bonds of between November 2022 to March 2023, making an loss of $5,197 from trading in the bonds during this period.