By Jayshree P Upadhyay and Krishn Kaushik

India's market regulator is investigating the relationship between the Adani Group and a fund incorporated in the British Virgin Islands to see if there has been a violation of share ownership rules, two sources with direct knowledge of the matter said.

The fund is called Gulf Asia Trade & Investment, the sources said. It is owned by Dubai businessman Nasser Ali Shaban Ahli, according to checks of its website last month although the site has since been pulled down.

The fund has invested in several listed Adani firms, according to the Organised Crime and Corruption Reporting Project (OCCRP) and data that the investigative journalist group has provided to Reuters.

The probe is part of the Securities and Exchange Board of India's (SEBI) investigation into the Indian conglomerate which follows a January report by short-seller Hindenburg Research that said offshore shell companies "surreptitiously" owned stock in Adani listed firms, posing governance concerns.

A key question for SEBI investigators is whether Gulf Asia's ties with the Adani Group were such that it would be deemed to be acting "in concert" with key Adani shareholders, said the sources, who declined to be identified as the investigations are ongoing and private.

This part of the SEBI investigation has not been previously reported.

The Adani Group did not comment on the SEBI probe and its possible ties with the fund when contacted by Reuters.

Shares of Adani Enterprises and Adani Ports turned negative after the report and were trading down 0.1% and 0.5%, respectively.

The conglomerate has previously said it categorically rejects allegations by OCCRP that there was an "opaque use" of funds by business partners to invest in its listed companies. It has also denied allegations made by Hindenburg, saying all transactions made with entities that qualified as related parties had been fully disclosed.

SEBI and Gulf Asia did not respond to requests for comment. Reuters was not able to contact Ahli. Emails and phone calls made to his main financial services firm, Al Jawda Trade and Services which is based in the United Arab Emirates, went unanswered.

MERGER DOCUMENT

Indian law stipulates that listed companies should at least be 25% publicly owned to avoid price manipulation and that all deals involving entities acting in concert must identify and disclose the parties.

Ahli was described by the OCCRP in August as one of two individual investors with "longtime business ties" to the group's founder, billionaire Gautam Adani.

The non-profit global network of investigative journalists also alleged Gulf Asia used offshore structures to buy and sell Adani shares between 2013 and 2018, citing a review of filings from tax havens and internal company emails.

A filing made with the British Virgin Islands corporate registry and reviewed by Reuters shows Gulf Asia merged with EZY Global Pte Ltd - a "related entity" of Adani Enterprises, the conglomerate's flagship firm, in September 2011.

Gulf Asia was the surviving entity. At the time of the merger, EZY shareholders would have had ownership in Gulf Asia but the information provided in the document did not make clear how much.

EZY had been incorporated in the British territory in 2006, while Gulf Asia was incorporated there in May 2011.

According to data shared by the OCCRP with Reuters, Gulf Asia started investing in Adani shares months after SEBI ordered 105 Indian companies in June 2013 to increase the number of shares held by the public to at least 25% of their total floats.

In April 2014, Gulf Asia held $51.4 million worth of shares in Adani Enterprises and Adani Power. In March 2017, that had increased to $202 million in four group companies - Adani Enterprises, Adani Power, Adani Transmission and Adani Ports, according to the OCCRP data.

Adani Enterprises has not listed Gulf Asia as a related party in its annual reports, although EZY Global was listed for the 2006-2011 fiscal years.

SEBI said in August it was close to completing its probe. At the time, it said it was investigating 24 transactions involving the group's listed companies and had completed work on 22 of them.

The Adani Group, whose businesses span ports, airports, power as well as the property sector, has seen its main seven listed firms lose a combined $100 billion in market value since the Hindenburg report.

(Reporting by Jayshree P Upadhyay and Krishn Kaushik; Editing by Sumeet Chatterjee, Edwina Gibbs and Louise Heavens)