In a recent twist of events, the Securities and Exchange Board of India’s (SEBI) notice to Hindenburg Research revealed significant details about how the Adani Group was targeted. The revelations involved Kingdon Capital, which allegedly used Kotak Mahindra Bank to short-sell Adani. Hindenburg’s response to SEBI has disclosed that Hindenburg and Kingdon Capital partnered to orchestrate a strategic move against Adani Group and benefitted from short-selling Adani stocks.
The disclosure has put a spotlight on Kingdon Capital, its founder Mark Kingdon and the complex financial manoeuvres in play. Kotak has however denied the allegations.
Offshore fund and investment manoeuvres
The focal point of the scrutiny is that on Kingdon Capital’s recommendation, Kotal Mahindra Bank created an offshore fund named the Kingdon India Opportunity Fund. It served as a critical vehicle for Kingdon Capital to engage in short selling of Adani Group’s shares.
It has come to light that the creation and utilisation of this fund was part of sophisticated strategies employed by Kingdon Capital to leverage financial markets to their advantage. Kotal Mahindra Bank facilitated this offshore fund which further complicates the narrative and prompts questions about the bank’s involvement and due diligence processes. The implications of these manoeuvres extend beyond just financial gains for the stakeholders involved and touch upon regulatory, ethical, and geopolitical dimensions.
Here’s a huge smoking gun in the sordid episode of the short sale of #Adani shares by #Hindenburg. Pursuant to #SEBI's notice to Hindenburg, the following facts emerge:
— Mahesh Jethmalani (@JethmalaniM) July 4, 2024
1. Hindenburg – a research agency – was hired by American businessman #MarkKingdon to prepare a report on the… https://t.co/yar0uEuarm
As pointed out by Mahesh Jethmalani, Kingdon India Opportunity Fund took large short positions in Adani shares through the Mauritius route before the Hindenburg report was published. The Rajya Sabha MP disclosed that funds amounting to $40 million were provided by Kingdon’s Master Fund, owned by the Kingdon family.
The man behind Kingdon Capital
Mark Kingdon is the founder and owner of Kingdon Capital. He is a prominent figure in the investment community. Kingdon’s background and connections add layers of complexity to the story that has been unfolding for the last week. Anla Cheng, a Chinese American woman, is the wife of Mark Kingdon. She is a senior partner at the private equity firm Sino-Century and the founder of the New York-based news platform SupChina.
Her career includes significant roles in investment banking including her tenure at at Robert Fleming & Co. and her positions on the Committee of 100 and the board of the Columbia Global Centers, East Asia. The affiliations that Cheng has can be attributed to Kingdon Capital as an extension at the intersection of influential financial, cultural, and geopolitical networks. This background raises questions about potential influences and interests shaping Kingdon Capital’s strategies and actions in global markets.
Investigations and allegations
Notably, Anla Cheng is facing an investigation by the US Senate for her involvement with SupChina which has now been renamed to The China Project. The focus of the investigation is on the allegations that SubChina harboured Chinese Communist Party agents, raising serious concerns about foreign influence and espionage.
The investigation against Cheng began in 2022. It cast a shadow over her professional activities, and by extension, the operations of Kingdon Capital’s operations. The possible implications of the allegations against Cheng are far-reaching as they touch upon issues of national security, economic espionage, and the integrity of financial markets. The investigation’s outcomes could have significant ramifications for Cheng, Kingdon Capital, and their associated networks.
The Haifa Port Deal: A possible motive
There is one critical element to the narrative which revolves around the Hafia Port Deal which Adani Group won. Hafia Port is located in Israel. Adani Ports and Israel’s Gadot outbid Chinese competitors for this strategic port privatization deal. The Adani Group’s victory to take control of the port defeating the Chinese represents a significant geopolitical and economic win for India and a corresponding loss for China. Haifa is one of the largest sea ports in Israel.
This development has fueled the speculation that the attack on Adani Stocks could be a retaliatory action by China using a short-selling campaign against the business group. The Haifa port deal is not just a commercial victory; it strengthens India-Israel business ties and enhances India’s strategic position in the region.
The possibility of China using its position in the financial markets and partnerships with entities like Kingdon Capital to retaliate against Adani highlights the interconnectedness of global business, finance, and geopolitics.
Speculation and retaliation
It has to be noted that so far, it is just speculation that there might be a connection between Kingdon Capital, Hindenburg Research, and the broader geopolitical context involving China and Adani Group. However, the speculations are compelling. The theory that China might be using financial manoeuvres as retaliation for losing the Haifa port deal is plausible. However, it requires in-depth investigation. There is a need for thorough analysis and transparency in uncovering the full scope of these activities. As more information becomes available, the motivations and implications of these actions will likely become clearer.
The revelations about Kingdon Capital’s involvement in short-selling Adani Group shares using offshore funds by Kotak Mahindra Bank and the ongoing investigations into Anla Cheng’s activities dive into a complex and multifaceted story. It highlights how complex and sophisticated the high-stakes financial strategies are and how they can have long-term effects on geopolitics. Notably, since Hinderburg initiated an attack on Adani Group, the business house has found itself in the defensive mode as it has to come up with explanations to counter the long list of allegations against it.
Questions that need answers
After these revelations, several questions have emerged that need answers. First is how the Kotal Mahindra Bank’s collaboration with Kingdon Capita took place, and who facilitated it. The Hindenbard report was amplified by a larger number of politicians, and it is needed to whether they were party to the conspiracy. It will be interesting to know whether Kotak Mahindra went ahead with the tie-up with Kingdon Capital even after known the China connection and the probe in the USA.
