Shares of Adani, the Indian conglomerate owned by billionaire Gautam Adani, received a boost on Friday as GQG Partners Inc, a boutique investment firm, invested $1.87 billion in the group. This investment helped to alleviate concerns about Adani’s ability to secure funding, while the company planned more roadshows to restore investor confidence further.
The investment by GQG is significant, as it marks the first major investment in Adani’s conglomerate since a critical report by short-seller Hindenburg Research led to a sharp decline in the market value of seven of Adani’s listed firms, totalling around $130 billion.
The report had raised concerns about high debt levels, alleged misuse of offshore tax havens, and stock manipulation, which Adani has denied. As a result, Adani had to cancel a planned $2.5 billion share sale.
According to analysts at Kotak Institutional Equities, GQG’s investment “may alleviate concerns about the group’s ability to raise funding for the repayment of loans against its listed company shares.” This suggests that the investment could help to boost Adani’s financial position and enable it to repay its debts, potentially restoring investor confidence in the group.
When approached by Reuters, Adani did not respond to the request for comment. The Adani Group has been in the news lately after securing a $3 billion loan from a sovereign wealth fund, according to two sources familiar with the matter. India’s top court is also investigating the group over regulatory disclosures and public shareholding norms.
As of September 2022, Adani group firms’ net debt totalled $24.1 billion. The group received a boost after GQG Partners bought stakes in several Adani companies worth $1.87 billion. This led to a surge in Adani stock prices, with flagship Adani Enterprises’ shares rising by as much as 17.5% on Friday, while Adani Ports and Special Economic Zone rose 10%.
Rajiv Jain’s stand on the investment in Adani Enterprises
GQG Partners Inc Chairman and Chief Investment Officer Rajiv Jain stated that the company disagreed with Hindenburg Research’s report and conducted its own thorough research into Adani. However, GQG’s recent investment in Adani has raised concerns from an Australian pension fund client, particularly as other major investors, including Norway’s sovereign wealth fund, have been divesting from Adani’s stock.
GQG manages money for at least four Australian pension funds with a total of A$563 billion ($380.36 billion) under management. Cbus Super, which has an emerging markets mandate with GQG, is seeking clarity on its exposure to Adani.
While GQG’s shares are up 3.58% this year, in line with the benchmark index, some investors may avoid investing in GQG due to Rajiv’s decision to invest in Adani, which has major coal assets and would not qualify as an environmental, social, and governance investment.
Jain is the founder, chairman, and chief investment officer of GQG and manages all of the firm’s strategies. GQG was listed on the Australian stock exchange in October 2021, raising A$1.18 billion, and Jain maintains a 68.8% stake in the company.
