GQG Partners, a US-based boutique firm, invested 154.5 billion rupees ($1.87 billion) in Adani Group, which is trying to recover from a rout triggered by a short-seller report.
(Bloomberg) — GQG Partners, a US-based boutique firm, invested 154.5 billion rupees ($1.87 billion) in Adani Group, which is trying to recover from a rout triggered by a short-seller report.
GQG bought shares in four firms from an Adani family trust at discounts ranging from 4.2% to 12.2% of Thursday’s closing price, according to a statement from the Indian conglomerate and exchange filings. Jefferies brokered the deal.
Rajiv Jain, GQG’s chairman, said in an interview that he first looked at billionaire Gautam Adani’s ports-to-power empire more than five years ago, but that recently the shares weren’t enough of a “bargain” to take a position. Since Hindenburg Research’s Jan. 24 report, the 10 companies have lost about $144 billion in market value.
“What is missing here, what nobody talked about, was these are phenomenal, irreplaceable assets,” Jain said. “You have to be greedy when people are fearful. Whenever there are parties going on, we stand on the sidelines watching people dance most of the time.”
Born and raised in India, Jain has built GQG into a $92 billion powerhouse with investments in industries like oil, tobacco and banking. Jain said his team met with Adani management last summer, and that he sees the investment helping advance India’s economy and energy infrastructure, including energy transition goals.
GQG bought shares of Adani Ports and Special Economic Zone Ltd. — considered the group’s crown jewel — at a 4.2% discount to Thursday’s close, resulting in a 4% stake. It bought Adani Green Energy Ltd. and Adani Transmission Ltd. at a 5.7% discount for stakes of 3.5% and 2.5%, respectively, and flagship Adani Enterprises Ltd. at a 12.2% discount for a 3.3% stake.
The companies are among the 10 companies that make up the ports-to-power empire. Together, the firms have added about $12.2 billion in market value in the three sessions through Thursday, clawing back some of this year’s losses.
“With a large deal such as today’s, it’s possible that a bottom is formed in the stocks for the near term,” said Abhay Agarwal, fund manager at Piper Serica Advisors. “It also shows the seller was desperate.”
Jain disputed the characterization that the Adani trust was desperate to sell, noting that some of the stocks have rallied more than 30% from recent lows.
Meanwhile, India’s top court set up a six-member panel to probe Hindenburg’s allegations of accounting fraud against the conglomerate. It also asked the local markets regulator to investigate any manipulation in Adani stocks and apprise the court and the expert panel of its findings within two months.
The Adani Group said it welcomed the order, and that it will “bring finality in a time-bound manner.” The Adani Group has repeatedly denied allegations made in Hindenburg’s report, which accused Gautam Adani of running the “Largest Con In Corporate History.”
Jain, for his part, is confident in the conglomerate and said GQG’s “edge” is understanding better than others how utilities operate.
He pointed out that Adani Enterprises has generated returns of about 30% a year in dollar terms since it was listed in 1994, outperforming some of the best-known companies in the world.
“What would you say that company is?” Jain said. “I’m just stating you don’t have frauds lasting 30 years, generally.”
–With assistance from Malavika Kaur Makol and Brian Chappatta.
(Updates throughout with comments from Jain.)
More stories like this are available on bloomberg.com
©2023 Bloomberg L.P.