Madhabi Puri Buch’s close ties to the American private equity group Blackstone raise several questions about conflicts of interest
SEBI Chairperson Madhabi Puri Buch has come under fire for her promotion of real estate investment trusts (REITs) as a potential asset class in Hindenburg’s recent report. She did so without mentioning, however, that her husband Dhaval Buch is currently a consultant to Blackstone Inc., the company that sponsored two of the four REITs listed in India.
There are still numerous unanswered questions about Madhabi Puri Buch’s ties to other companies, although in recent statements she has denied allegations of a conflict of interest raised by Hindenburg Research regarding her ownership of “shares in the two obscure offshore funds used in the Adani money-diversion scandal.”
According to The Morning Context, Buch’s close ties to American private equity firm Blackstone raise several conflicts of interest. Blackstone has significant holdings in India and supports numerous Indian companies. Given the sums they have invested in India, Bucher’s recusal from Blackstone’s affairs is inadequate, a senior fund manager who asked not to be identified told The Morning Context.
The Blackstone-Hindenburg connection has ensured that the allegations have remained controversial and prominent. Following the allegations, SEBI must now grapple with the possibility of a conflict of interest arising from its chairman’s previous role as a prominent private sector executive before joining the regulator.
There is speculation in capital market circles that Madhabi Puri Buch’s sphere of influence may make it difficult for her to discharge her regulatory duties. Although Buch said in a statement that she has receded from all matters related to Blackstone, it is important to note that Blackstone owns or has a significant stake in large companies including hospital chain Care Hospitals, IT services provider Mphasis, Aadhar Housing Finance, Indiabulls Housing Finance (now Sammaan Capital) and ASK Investment Managers, among others. This information is reported by The Morning Context.
It is unclear how many Blackstone firms are on Buch’s list of companies from which she has divested, and whether she has done so in all cases involving Blackstone companies. Buch and SEBI have not yet released this information to the public. Back in February, SEBI, under Buch’s supervision, had approved the initial public offering (IPO) of Aadhar Housing Finance, a company controlled by Blackstone. Through its subsidiary Epsilon Bidco Pte Ltd, Blackstone bought a 75 percent stake in Essel Propack Ltd (now known as EPL Ltd) between April and October 2019.
Dhaval Buch became a senior advisor at Blackstone in July 2019. “In April 2019, Ashok Goel Trust acquired a significant portion of Blackstone’s stake (51% of 75%). Atul Goel is a member of the leadership advisory board of Ashok Goel Trust. The trust is now classified as a public stakeholder but still owns a significant 7.6% stake in EPL. The Morning Context reports that Madhabi Puri Buch, a whole-time member of SEBI, settled an insider trading case against Atul Goel and his company E-city Hi-tech Projects on August 27, 2021. This raises serious doubts about Puri-Buch’s claim of denial in her statement.
