Nomura sued by Adani-linked fund accused in short-seller report

Nomura Holdings Inc's loans to an investment fund embroiled in a short-selling firm’s allegations against Indian billionaire Gautam Adani have come under scrutiny in a London lawsuit.

Some three years after Adani first faced questions about fraud and stock manipulation at his ports-to-power conglomerate, Tokyo-based Nomura was sued by a fund owned by Elara Capital Plc over an urgent cash demand that allegedly cost it tens of millions of dollars.

The Elara fund, known as Oyster Bay Fund Ltd, borrowed from Nomura for stock bets on

Adani Enterprises Ltd and Adani Ports & Special Economic Zone Ltd, according to High Court filings from the case. Shares in those companies plunged after a January 2023 report by Hindenburg Research accused Adani’s empire of “brazen stock manipulation” and alleged Elara was involved.

Some of Nomura’s most senior bankers in Asia were spooked and wanted to cut the size of the loans, according to the bank’s defence filed January 5. The Elara fund claimed that the bank requested $205 million in cash to recoup the debts but then breached a repayment plan by selling Adani shares that had been pledged as collateral — a move that resulted in losses of $43 million. The Tokyo-based lender has denied any wrongdoing.

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The case is part of the fallout from Hindenburg’s almost 100-page report on Adani, which at one point eroded more than $150 billion of value from his Adani Group’s publicly-traded entities and triggered local regulatory probes — including one involving Elara. Asia’s second-richest man rejected the report as “baseless” and “nothing short of a calculated securities fraud.”

The filings also show how Nomura dealt with loans to its high-risk trading clients in 2023, two years after losing almost $3 billion on similar trades with Archegos Capital Management.

Within days of the Hindenburg report, a group of Nomura’s top Asian officials, including head of equity-product sales Ajay Jain, Asia markets sales co-heads Corrinne Teo and Charles Myong, and managing director Priyanka Khurana, gathered on a video call with Elara Chief Executive Officer Raj Bhatt to request repayment.

"As discussed on the phone just now, given the huge volatility in the portfolio stocks, Nomura’s credit is very uncomfortable with the leverage on the portfolio and would like to withdraw the same," Khurana wrote in an email, according to the bank's filing.

Nomura had helped the Elara fund amass a “significant exposure” to the Adani companies through so-called total return swaps, according to the lender’s lawyers. These are securities that allow the buyer to wager on shares without owning them while using borrowed money to inflate potential gains. Banks that arrange these transactions typically demand collateral, or margin, that they can seize and sell if the stocks lose value and their loans are threatened.

“Nomura disagrees with Oyster Bay Fund’s claim, and we will vigorously defend it,” a spokesperson for Nomura said in an emailed statement. Elara CEO Bhatt didn’t respond to multiple emails and phone calls requesting comment. One of the firm’s lawyers in London declined to comment on the case. A spokesperson for the Adani Group declined to comment.

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Hindenburg’s report stated that two of Elara’s other investment funds had invested almost exclusively in various Adani shares and raised allegations that they were a front for Adani himself. One had pumped about $3 billion into the stocks — almost 99% of its market value — while 94% of the other fund’s assets had previously been exposed to the mogul’s empire, according to the report.

Nomura’s lawyers cited Hindenburg’s accusations in their filing, noting that the short seller had alleged that some of Elara Capital’s funds “appeared to be supported by the Adani Group." In a 413-page rebuttal to Hindenburg’s allegations, Adani described “innuendos” about the Elara funds as “incorrect” and declined to comment further on "behaviour of public shareholders."

The Securities and Exchange Board of India, the country’s capital-markets regulator, asked the Elara funds for an explanation as part of a probe into potential violations of disclosure norms, the Economic Times reported in 2024. The funds hadn’t responded to requests for information, Reuters reported last May.

In September, SEBI said the evidence relating to Adani’s alleged third-party transactions and disclosures was insufficient to support fraud claims.

Elara, based in London and regulated by the UK Financial Conduct Authority, operates multiple financial-services businesses and investment funds, UK company filings show. The firm is majority-owned by Bhatt and had about £98 million ($132 million) of shareholders’ funds at the end of March 2025, according to filings.

When Elara first came into the spotlight after the Hindenburg report, Jo Johnson, a former Conservative Party minister and brother of ex-Prime Minister Boris Johnson, stepped down as a director, saying the role required “greater domain expertise in specialised areas of financial regulation than I anticipated.”

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