Hindenburg Saga: SEBI chief Madhabi Puri-Buch's Blackstone connection raises new questions

The SEBI chairperson Madhabi Puri Buch has been under fire for her promotion of real estate investment trusts (REITs) as a potential asset class in Hindenburg's latest report. She did this while failing to disclose that her husband Dhaval Buch is currently an adviser to Blackstone Inc., the company that has sponsored two of the four listed REITs in India.

There are still several unanswered questions regarding Madhabi Puri Buch's connections with other businesses, despite her recent statements refuting the conflict of interest allegations made by Hindenburg Research regarding her ownership of "stakes in both the obscure offshore funds used in the Adani money syphoning scandal." 

According to The Morning Context, Buch's close connections with American private equity firm Blackstone present several conflict of interest concerns. Blackstone has significant holdings in India. It is the supporter of numerous Indian businesses. Given the amount of money they have invested in India, the fact that Bucher has recused herself from Blackstone affairs is insufficient, a seasoned fund manager who asked to remain anonymous told The Morning Context.

The association between Blackstone and Hindenburg has guaranteed that the accusations have remained controversial and prominent. Following the claims, SEBI will now have to address the possibility of a conflict of interest arising from its chairperson's prior role as a prominent private sector executive before joining the regulatory body. 

Capital market circles speculate that Madhabi Puri Buch's sphere of influence may make it more difficult for her to carry out her regulatory duties. Although Buch stated in a statement that she had withdrawn from all Blackstone-related matters, it is important to note that Blackstone either owns or has a significant stake in major companies, including the hospital chain Care Hospitals, the 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It is unclear how many Blackstone firms makeup Buch's list of companies in which she has withdrawn her participation, as well as whether she has done so in all cases involving Blackstone companies. Buch and SEBI have not yet made this information available to the public. Back in February, under Buch's supervision, SEBI had approved the initial public offering (IPO) of Aadhar Housing Finance, a business that Blackstone controlled. Through its subsidiary Epsilon Bidco Pte Ltd, Blackstone bought a 75% share in Essel Propack Ltd (now known as EPL Ltd) between April and October 2019. 

Dhaval Buch became a senior adviser at Blackstone in July of 2019. "In April 2019, the Ashok Goel Trust was the buyer of a significant portion of the Blackstone interest (51% of the 75%).  Atul Goel is a member of the Ashok Goel Trust's leadership advisory board. The trust is now categorised as a public stakeholder, yet it still has a sizeable 7.6% interest in EPL. The Morning Context reports that on August 27, 2021, Madhabi Puri Buch, a full-time member of SEBI, resolved an insider trading case against Atul Goel and his business, E-city Hi-tech Projects. This raises serious doubts about Puri-Buch's assertion of recusal in her statement.