The Securities and Exchange Board of India (SEBI) has rejected settlement applications submitted by 13 foreign portfolio investors (FPIs) linked to the Adani Group, according to people familiar with the matter. The applications were turned down after the terms proposed by the funds did not align with the conditions sought by the market regulator. The development keeps a long-running regulatory investigation involving the offshore funds active.
The 13 funds had sought to resolve the regulatory proceedings through SEBI’s settlement mechanism. Some of the funds were reportedly unwilling to provide information sought by the regulator, including details concerning their ownership and control structures. The investigation dates back to 2020 and focuses on whether the funds were genuine public shareholders or were acting on behalf of Adani Group founders.
SEBI Rejects Settlement Terms Proposed By 13 FPIs
The rejected applications involve 13 overseas investment funds that had significant holdings in Adani Group companies.
According to reports, SEBI informed representatives of the funds last week that their settlement applications had been rejected. The regulator’s objection was reportedly linked to differences between the terms proposed by the funds and those required by SEBI.
Adani-Linked FPI Case At A Glance
| Particular | Details |
|---|---|
| Regulator | SEBI |
| Funds involved | 13 foreign portfolio investors |
| Nature of proceedings | Regulatory investigation |
| Investigation period | Dating back to 2020 |
| Main issue | Ownership and control of offshore funds |
| Settlement applications | Rejected |
| Reason reported | Proposed terms did not meet SEBI’s requirements |
| Information concerns | Some funds reportedly unwilling to provide requested information |
| Current status | Regulatory proceedings remain unresolved |
The rejection does not by itself establish that the funds violated securities laws. It means that their proposed settlement applications were not accepted on the terms offered.
Which 13 Foreign Funds Are Involved?
Reports have identified the 13 FPIs involved in the settlement process.
They include Albula Investment Fund, Cresta Fund, MGC Fund, Asia Investment Corporation (Mauritius), APMS Investment Fund, Elara India Opportunities Fund, Vespera Fund, LTS Investment Fund, Emerging India Focus Funds, EM Resurgent Fund, Polus Global Fund, New Leaina Investments and Opal Investments.
List Of 13 Funds
| No. | Foreign Fund |
|---|---|
| 1 | Albula Investment Fund |
| 2 | Cresta Fund |
| 3 | MGC Fund |
| 4 | Asia Investment Corporation (Mauritius) |
| 5 | APMS Investment Fund |
| 6 | Elara India Opportunities Fund |
| 7 | Vespera Fund |
| 8 | LTS Investment Fund |
| 9 | Emerging India Focus Funds |
| 10 | EM Resurgent Fund |
| 11 | Polus Global Fund |
| 12 | New Leaina Investments |
| 13 | Opal Investments |
The funds have been associated with the wider regulatory scrutiny of offshore investors that held stakes in Adani Group companies.
What Is SEBI Investigating?
At the heart of the matter is the question of whether the foreign funds were genuinely independent public shareholders.
SEBI has been examining whether some offshore funds had links to the promoters of Adani Group companies or were acting on behalf of the group’s founders while holding shares in listed Adani entities.
The investigation is significant because listed Indian companies are required to comply with minimum public shareholding requirements, while securities regulations also impose disclosure and beneficial-ownership obligations on investors.
Core Regulatory Questions
Offshore Investment Funds
↓
Who Owns The Funds?
↓
Who Controls The Funds?
↓
Are They Independent Investors?
↓
Or Linked To Promoters?
↓
Were Disclosure Rules Followed?The settlement dispute therefore concerns more than the funds’ investment decisions. It involves questions around ownership, control and regulatory disclosures.
Why Offshore Fund Ownership Matters
Foreign portfolio investors can hold substantial positions in listed Indian companies.
When several offshore funds have common ownership, control or beneficial interests, regulators may examine whether those relationships have been properly disclosed and whether the funds should be treated independently for regulatory purposes.
This becomes particularly important when the funds hold significant stakes in companies belonging to the same promoter group.
Why Regulators Examine FPI Structures
| Issue | Why It Matters |
|---|---|
| Beneficial ownership | Identifies the ultimate economic owner |
| Control | Determines who makes investment decisions |
| Common ownership | Can reveal relationships between funds |
| Disclosure | Ensures investors receive relevant information |
| Public shareholding | Supports compliance with listing rules |
| Market integrity | Prevents undisclosed arrangements |
The current dispute is centered on whether the information provided by the funds satisfies SEBI’s requirements.
Some Funds Were Reportedly Unwilling To Provide Information
A particularly important part of the latest development is the reported disagreement over information.
Business Standard reported that some of the funds were unwilling to provide information sought by SEBI. The information relates to issues that are important to determining the funds’ ownership and control structures.
That appears to have contributed to the failure of the settlement process.
SEBI Requests Information
↓
Funds Provide Information
↓
Regulator Evaluates Ownership
↓
Settlement Terms Proposed
↓
Terms Must Meet SEBI Requirements
↓
Applications RejectedThe precise details of the information sought and the individual positions of all 13 funds have not been publicly disclosed in the reports available so far.
Settlement Rejection Does Not Mean Final Guilt Finding
It is important to distinguish between rejection of a settlement application and a final finding of regulatory wrongdoing.
A settlement is a mechanism through which regulatory proceedings can potentially be resolved without continuing through the entire enforcement process.
If a settlement application is rejected, it does not automatically mean the regulator has made a final determination that every allegation against the applicant has been established.
Settlement Vs Enforcement Finding
| Settlement Rejection | Final Regulatory Finding |
|---|---|
| Proposed resolution not accepted | Allegations adjudicated |
| Terms may be inadequate | Evidence assessed |
| Proceedings can continue | Liability may be determined |
| Does not automatically establish guilt | Formal finding can establish violation |
Therefore, the latest development should be understood as a setback for the funds’ attempt to settle the matter rather than a final judgment on all allegations.
The Case Has Roots In The Pre-Hindenburg Period
The investigation involving these funds dates back to 2020, predating the January 2023 publication of the Hindenburg Research report that triggered a separate wave of regulatory scrutiny around the Adani Group.
This distinction is important because several different regulatory proceedings have become associated with the broader Adani controversy.
The FPI investigation concerning ownership and public-shareholding questions is one part of that wider regulatory history.
Adani Regulatory Timeline
2020
FPI-Related Investigation
↓
January 2023
Hindenburg Report
↓
SEBI Investigations
↓
2024-25
Regulatory Proceedings
↓
2025
Several Adani-Related Proceedings Closed
↓
2026
13 FPI Settlement Applications RejectedThe latest development therefore represents a continuation of an older regulatory process rather than a new investigation launched in response to the Hindenburg report.
SEBI Previously Closed Several Adani-Related Proceedings
In September 2025, SEBI closed proceedings against Adani Group companies, Gautam Adani and associated entities in two matters related to allegations raised by Hindenburg Research, including alleged fund diversion, related-party transaction violations and fraud.
However, that outcome should not be confused with the current FPI settlement issue.
The latest reports concern the 13 overseas funds and their regulatory proceedings, which involve questions surrounding their status, ownership and disclosures.
Different Parts Of The Adani Regulatory Story
| Matter | Focus |
|---|---|
| Hindenburg-related proceedings | Allegations concerning Adani Group |
| FPI investigation | Ownership/control and regulatory disclosures |
| Settlement applications | Proposed resolution by foreign funds |
| Current development | SEBI rejects 13 applications |
This distinction helps explain why regulatory activity involving Adani-linked entities continues even after certain earlier proceedings were closed.
Five Funds Chose A Different Route
The 13 funds are not necessarily following the same legal strategy.
Earlier reports indicated that five offshore FPIs — Emerging India Focus Funds, EM Resurgent Fund, Polus Global Fund, New Leaina Investments and Opal Investments — had challenged SEBI proceedings before the Securities Appellate Tribunal (SAT).
The other funds had pursued settlement applications.
Different Approaches
| Group | Approach |
|---|---|
| Five funds | Challenged proceedings before SAT |
| Other funds | Pursued settlement |
| Current development | 13 settlement applications rejected |
| Regulatory process | Continues |
This means the latest development could lead to different legal paths for the funds depending on their individual cases and strategies.
Why The Case Matters For Adani Group Investors
The latest development could attract renewed attention from investors because foreign institutional ownership is an important part of the shareholder structure of listed Adani companies.
Any regulatory action affecting offshore investors can influence market perceptions about governance, disclosures and the ownership structure of listed entities.
However, the rejection of settlement applications does not by itself indicate a change in the operating performance of Adani Group companies.
Potential Market Considerations
| Factor | Possible Impact |
|---|---|
| Regulatory uncertainty | Negative sentiment |
| Settlement rejection | Keeps legal issue active |
| Investor disclosures | Increased scrutiny |
| FPI ownership | Potential monitoring of holdings |
| Company operations | No direct operational impact established |
| Market confidence | Depends on further regulatory developments |
The eventual market impact will depend heavily on what SEBI does next and whether additional proceedings or findings emerge.
Foreign Investors Could Face Greater Scrutiny
The case also highlights the increasing scrutiny of offshore investment structures in India.
Indian regulators have been seeking greater transparency around beneficial ownership, control and the source of investments.
For global investors, this means compliance requirements can extend beyond simply registering as an FPI and reporting holdings.
Areas Of Regulatory Focus
FPI Registration
↓
Ownership Disclosure
↓
Beneficial Ownership
↓
Investment Limits
↓
Related Relationships
↓
Ongoing ComplianceThe Adani-linked investigation demonstrates the importance of maintaining detailed records of ownership and control structures.
Why Settlement Terms Matter
A settlement application is not simply a request to close a case.
The regulator can assess whether the proposed terms adequately address the regulatory concerns involved.
If the terms do not satisfy SEBI, the application can be rejected.
According to the latest reports, that is what happened in the case of the 13 funds: their proposed terms did not align with what SEBI was seeking.
What Happens Next?
The rejection does not necessarily end the matter.
The funds could potentially consider their legal options, including revisiting settlement discussions under acceptable terms or continuing to contest regulatory proceedings, depending on the circumstances of each case.
The five funds that had already approached SAT represent a separate track.
Settlement Rejected
↓
Possible Next Steps
│
┌─────┼──────────────┐
↓ ↓ ↓
New Legal Continue
Terms Challenge Proceedings
│ │ │
└─────┴──────────────┘
↓
Final ResolutionThe exact next steps for each of the 13 funds have not been publicly detailed.
SEBI’s Broader Settlement Activity Continues
The rejection of these applications comes even as SEBI continues to use its settlement mechanism in other regulatory matters.
SEBI’s official orders database lists numerous settlement orders issued during 2026, including matters involving financial institutions, funds and listed companies.
This indicates that the rejection of the 13 Adani-linked FPI applications should not be interpreted as a general suspension of SEBI’s settlement process.
Rather, it appears to reflect the regulator’s assessment that the specific terms proposed in this case did not meet its requirements.
The Bigger Picture
SEBI’s rejection of settlement applications from 13 foreign funds linked to the Adani Group keeps a long-running regulatory dispute alive. The funds had sought to settle proceedings concerning questions around whether they were genuine independent public shareholders or entities linked to, or acting on behalf of, Adani Group founders. Some funds were reportedly unwilling to provide information sought by the regulator, while the settlement terms proposed by the investors did not align with SEBI’s requirements.
The development is significant for the broader debate around beneficial ownership and transparency in India’s capital markets. However, rejecting a settlement application is not the same as issuing a final finding of wrongdoing. The next steps taken by the regulator and the individual funds will determine whether the matter develops into further enforcement proceedings, renewed settlement discussions or additional appeals.
Looking Ahead
The immediate focus will be on how the 13 funds respond to SEBI’s rejection and whether any of them seek to revise their settlement proposals or pursue further legal remedies. The five funds that had already challenged SEBI before the Securities Appellate Tribunal are following a different route, meaning the broader dispute could continue through multiple legal channels.
For India’s capital markets, the case highlights the growing importance of transparency around offshore investment structures. Regulators are increasingly focused on identifying beneficial owners and understanding who ultimately controls large investment positions. The eventual resolution of the Adani-linked FPI proceedings could therefore have implications beyond the individual funds, particularly for how foreign investors structure, disclose and maintain their investments in Indian listed companies
Get the day’s top stories in your inbox
One concise email. No spam, unsubscribe anytime.
