SEBI Notice Mentions Kotak Group Fund With Holdings in Seven Companies

3 Jul 2024 , 10:09 AM

A Kotak Group Fund specified in the Securities and Exchange Board of India’s (SEBI) show cause notice issued to Hindenburg Research owns more than 1% of at least seven other Indian-listed companies.

To be clear, K India Opportunities Fund Limited – Class F, the FPI mentioned in the SEBI notification, is a sub-fund of Kotak Group’s K India Opportunities Fund, which has nine sub-funds, each registered with the capital markets regulator as a separate FPI.

According to the SEBI notice, K India Opportunities Fund Limited – Class F, a SEBI-registered FPI, traded in Adani Enterprises shares before the report was published and then closed out its entire short position after the report was published, profiting ₹183.24 Crore or $22.25 million.

Meanwhile, Ace Equities data shows that K India Opportunities Fund Limited, through another sub-fund called K India Opportunities Fund Limited Class S, owns more than 1% of seven companies: Krsnaa Diagnostics, Mold-Tek Packaging, Poddar Housing and Development, Shilchar Technologies, KDDL Ltd., Vivimed Labs, and Supreme Infrastructure India.

The collective value of these seven companies’ interests is estimated to be over ₹362 Crore.

Supreme Infrastructure India has the greatest stake, with the fund owning shares totaling 7.39% of the company. It owns approximately 2-3% of Krsnaa Diagnostics, Mold-Tek Packaging, and Shilchar Technologies.

The fund may have stakes in numerous other companies, but legal regulations demand the disclosure of the shareholder’s name only if the interest is more than one percent.

Furthermore, the other sub-funds may hold shares in Indian companies, but the stake would be less than one percent, therefore it would not appear in Ace Equities’ database.

Meanwhile, Kotak Mahindra Group confirmed that Hindenburg Research was never a customer of K India Opportunities Fund (KIOF) or Kotak Mahindra International Ltd (KMIL), and that the fund was unaware of the US short seller’s partnership with any of its investors.

According to the SEBI show cause letter, Kingdon Capital, a Hindenburg Research customer, and Kotak Mahindra (International) Ltd entered an investment advising agreement on January 5, 2023.

According to the SEBI notice, Kingdon Capital served as KMIL’s investment advisor for K India Opportunities Fund Limited Class F investments.

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