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Saturday, September 30, 2023

GQG Partners Inc buys $1.87 billion stakes in Adani Group firms

On Friday, global investor GQG Partners Inc purchased stakes worth $1.87 billion in four companies under India’s Adani Group, causing their share prices to surge. This is the first significant investment in Gautam Adani’s conglomerate since a critical report by U.S.-based Hindenburg Research led to a $130 billion market value loss for seven of Adani’s listed firms. The report cited high debt, alleged misuse of offshore tax havens, and stock manipulation. Adani denied these claims, but the ensuing drop in stock prices led the group to cancel a $2.5 billion share sale.

Kotak Institutional Equities analysts suggest that GQG’s investment may alleviate concerns about the Adani Group’s ability to attract funding for loan repayments against its listed company shares. As of September 2022, Adani Group firms had a total net debt of $24.1 billion. The group has attempted to reassure investors since the report with road shows and calls with bondholders.

Avinash Gorakshakar, head of research at Profitmart Securities, views GQG’s stake purchase as a positive development for Adani Group stocks, which have experienced a prolonged period of underperformance and widespread selling.

GQG Partners buys significant stakes in four Adani Group firms for $1.87 billion, causing share prices to surge. The purchases include 3.4% of Adani Enterprises Ltd, 4.1% of Adani Ports and Special Economic Zone Ltd, 2.5% of Adani Transmission Ltd, and 3.5% of Adani Green Energy Ltd. Adani Enterprises’ shares rose by 11.4%, while Adani Ports increased by 8.1%, and Adani Green Energy and Adani Transmission jumped 5% each in intraday trade. GQG’s Sydney-listed shares ended Friday down 3%, but Chairman and Chief Investment Officer Rajiv Jain noted that the Florida-based firm had carried out its own “deep dive” into Adani and disagreed with Hindenburg’s report. Jain’s investors are well aware that he does not explicitly run an ESG fund and that he goes for wherever there is unrealised value, according to Morningstar analyst Shaun Ler. GQG is up 3.58% this year, in line with the benchmark.

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