Why SEBI chief Madhabi Puri Buch’s ties with Blackstone warrant an investigation

Amid ongoing controversy between Hindenburg Research and the Securities and Exchange Board of India (SEBI) chief Madhabi Puri Buch, the latter’s ties with US equity major Blackstone have also come under greater scrutiny. Experts are calling for an investigation over Buch’s alleged conflict of interest in all Blackstone-related matters as SEBI chairperson.

Notably, Madhabi’s husband Dhaval Buch has been serving as a senior advisor at Blackstone since July 2019. Earlier, Madhabihad stated that she recused herself from Blacktone-related issues but her statement didn’t clarify her position on matters related to companies indirectly involved with Blackstone or its subsidiaries.

In its report, Hindenburg had alleged that during Dhaval’s time as an advisor to Blackstone; SEBI proposed, approved and facilitated major Real estate investment trusts (REITs) regulations changes.

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"Since Madhabi Buch became Chairperson in March 2022, SEBI has proposed and implemented a raft of REIT legislation, of significant benefit to Blackstone as one of the largest REIT sponsors in India, whom her husband works for," the Hindenburg report said.

In her statement, Buch, who became a full-time member at SEBI in April 2017 and later became its chief in March 2022, just dismissed these allegations, without providing any details.

“Blackstone is heavily invested in India. It is the promoter of many companies in India. That (Buch) has recused herself from Blackstone matters isn’t enough given the amount of investment they have in India," a veteran fund manager, requesting anonymity told The Morning Context.

There are several firms related to Blackstone, like Indiabulls Housing Finance (now Sammaan Capital), Aadhar Housing Finance, asset and wealth management firm ASK Investment Managers, hospital chain Care Hospitals and IT services provider Mphasis.

These firms come under Blackstone group's $50 billion umbrella in India, including $30bn in real estate only.

Now, there are concerns that SEBI chief Buch may have violated norms in dealing with certain firms. For instance, in May 2024, Aadhar Housing Finance (backed by Blackstone) went public, only after SEBI cleared its draft red herring prospectus.

SEBI also cleared the IPO of a company controlled by Blackstone under the watch of Buch.

Now the question is, did Buch recuse herself from these cases as well? Only a detailed investigation against the SEBI chief may provide an answer.

(With inputs from agencies)