Billionaires: Gautam Adani set to hire global audit firm in family office revamp

In our round-up of the world’s ultra-wealthy, Elon Musk’s X attracts capital from Silicon Valley elites and global funds and Carl Icahn reaches $2 million SEC settlement in margin loan investigation

Gautam Adani, chairman of Adani Group, is laying down a succession plan and bringing professionals to manage his family offices. Bloomberg

Gautam Adani plans to appoint auditors from a top global firm and hire a chief executive for his family offices to bring a level of disclosure often associated with listed companies, Bloomberg reported.

The founders of the mining-to-media conglomerate are talking to two of the big six accounting firms to audit the family offices’ accounts, the sources said.

The moves aim to bring transparency in how the wealth of Asia’s second-richest person, valued at $105.4 billion, is managed and underscores the lessons from last year’s short-seller attack.

The first-generation entrepreneur faced intense scrutiny and criticism from Hindenburg Research on multiple issues, including the opacity in how the group operates and controls its listed entities.

Hiring is under way for a team of about five people, led by a chief executive and a chief investment officer, that will initially report to the group chief financial officer, Jugeshinder Singh, and eventually to the billionaire founder, the people said.

Mr Adani's family’s wealth offices were, until now, run informally with the help of group firms’ chief financial officers.

While getting professionals to lead wealth offices is not uncommon, especially for billionaires who are still actively running their businesses, efforts to appoint a global audit firm and bolster disclosures are a rather rare initiative and in sharp contrast to most of the family offices, where discretion and secrecy are preferred.

This shows that Mr Adani is looking for an image makeover after a tumultuous period last year. Increased transparency will burnish the conglomerate’s credentials too as it steadily increases its global footprint and woos global investors.

The recast family office management will also oversee the founders’ shareholding across the listed Adani Group firms, besides preparing financial reports for the additional disclosures the family wants to make, the sources said.

While some of the professional managers may be hired next month, the recast family office will be fully operational from April 2025. The structure may undergo changes in the meantime, the sources added.

Mr Adani’s empire has been growing at a breakneck pace in the past five years, often by piling on debt.

This rapid pace of growth – and the runaway rally in his firms’ shares – came under the scathing spotlight after Hindenburg made allegations of wide-ranging corporate malfeasance in January last year.

The US short seller had also criticised the Adani family for using a complicated web of offshore entities to control a larger stake in their listed businesses than disclosed to exchanges.

Despite Adani Group denying these accusations, the short seller’s withering report lopped off more than $150 billion from Adani companies’ market value at one point last year and pushed the founders into damage control mode for months.

After executing operational fixes – paring debt, reining in costs and luring investors like GQG Partners – that helped the Adani Group restore most of the lost ground, the founders have now moved to address deeper questions such as laying down a succession plan and bringing professionals to manage their family offices.

The takeover of social media platform X drew controversy almost from the moment Elon Musk announced his intentions. AFP

Elon Musk

Elon Musk’s X attracted investment from a host of big names from Silicon Valley to global finance, including Sean “Diddy” Combs and billionaire Larry Ellison, according to a court document unsealed on August 21.

Many investors listed, such as Twitter co-founder Jack Dorsey and venture capital houses Andreessen Horowitz and Sequoia, have been previously disclosed.

However, the filing outlines X Holdings shareholders in full for the first time in one document, giving the public an overview of the backers behind the social media platform Mr Musk bought for $44 billion in 2022.

They include big names in investing such as Bill Ackman’s Pershing Square, Saudi Prince Alwaleed bin Talal and Fidelity.

The takeover drew controversy almost from the moment Mr Musk announced his intentions.

Since the acquisition, Mr Musk has gutted its staff and alienated advertisers. He now plans to transform the platform into an everything-app, incorporating services from highly-produced video series to payments.

The court filing, which a judge ordered unsealed as part of a lawsuit brought by former Twitter employees, lists scores of shareholders but doesn’t offer a breakdown nor delve into the latest details of their stakes.

Previous disclosures showed that Mr Musk owned 75 per cent of X’s parent company as of October, while no other backer held more than 10 per cent.

Billionaire Carl Icahn and his investment firm have agreed to pay $2 million to settle a US Securities and Exchange Commission probe. AP

Carl Icahn

Billionaire Carl Icahn and his investment firm have agreed to pay $2 million to settle a US Securities and Exchange Commission probe that found the famed investor didn’t properly disclose how much he was borrowing against his stake in the company.

Mr Icahn was fined $500,000 and Icahn Enterprises will pay $1.5 million related to insufficient disclosure of how IEP units were pledged as collateral against his personal margin loans, according to an SEC statement on August 19.

The investigation started after a report by short-seller Hindenburg Research tanked shares in Mr Icahn’s investment firm.

The settlement agreement shows that the 88-year-old investor pledged up to 65 per cent of his IEP units from 2018 to 2022. In exchange, he was granted up to $5.1 billion in personal margin loans by various lenders.

“We are glad to put this matter behind us and will continue to focus on operating the business for the benefit of unit holders,” Mr Icahn said.

After Hindenburg’s report, “the government investigation that followed has resulted in this settlement which makes no claim IEP or I inflated NAV or engaged in a ‘Ponzi-like’ structure”.

Both settlement agreements noted that Mr Icahn and IEP co-operated with the investigation in providing relevant information and documents.

Mr Icahn and Icahn Enterprises didn’t admit to or deny the SEC’s findings, but they agreed to cease and desist from future breaches, the agency said.

We are glad to put this matter behind us and will continue to focus on operating the business for the benefit of unit holders

Carl Icahn

The SEC determined that Mr Icahn didn’t properly amend a securities filing to describe his personal agreements and pledges of IEP securities until July last year. That month, he also renegotiated loan terms with a group of banks, unlinking the loans from IEP’s share performance.

Both Mr Icahn and IEP had independent disclosure obligations under federal law that would have revealed Mr Icahn’s pledge of more than half of IEP’s outstanding shares, said Osman Nawaz, chief of the SEC Enforcement Division’s complex financial instruments unit.

“Due to both disclosure failures, existing and prospective investors were deprived of required information,” Mr Nawaz said.

Icahn Enterprises said last year that it had been contacted by both the SEC’s enforcement division and the US Attorney’s Office to provide information on its corporate management, capitalisation, securities offerings, disclosures, dividends, valuation, marketing materials and due diligence.

Icahn Enterprises’ stock was sent on a downward spiral last May when Hindenburg Research said it was shorting units of the company.

Hindenburg said in a lengthy report that IEP was overpriced and that it had found evidence of inflated valuations for some of its assets.

Hindenburg Research, run by Nate Anderson, published a report last year accusing IEP of inflating its asset value as well as underperformance.

“Icahn rightly got charged by the SEC for failing to disclose details of his massive margin loan,” Hindenburg wrote in a social media post on August 19.

“Rather than blame us for his own investment failings, Icahn should put his money where his mouth is.”