US investment company GQG invests $1.87bn in India's Adani group

The investment comes on a day when India's top court asked market regulator SEBI to investigate the group for any lapses related to public shareholding norms

US boutique investment firm GQG Partners has bought shares worth $1.87 billion in four Adani group companies. Reuters
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US boutique investment firm GQG Partners has bought shares worth $1.87 billion in four Adani group companies, marking the first major investment in the Indian conglomerate since a short-seller's critical report sparked a stock rout.

Seven listed Adani companies have lost $135 billion in market value since January 24, when Hindenburg Research accused it of improper use of offshore tax havens and stock manipulation — allegations the billionaire Gautam Adani-led group has denied but that led it to call off a $2.5 billion share sale.

The investment comes on a day when India's top court asked market regulator Securities and Exchange Board of India to investigate the group for any lapses related to public shareholding norms or regulatory disclosures.

The group has been trying reassure investors with roadshows and calls with bond holders. According to sources, Adani has told creditors it has secured a $3 billion loan from a sovereign wealth fund.

US-based, Australia-listed GQG has, through block deals, bought shares worth 154.46 billion rupees ($1.87 billion) in four Adani group companies, including the conglomerate's flagship firm Adani Enterprises, a regulatory filing showed.

“We believe that the long-term growth prospects for these companies are substantial,” said Rajiv Jain, GQC chairman and chief investment officer.

GQG took a 3.4 per cent stake in Adani Enterprises for about $662 million, 4.1 per cent in Adani Ports for $640 million, 2.5 per cent in Adani Transmission for $230 million, and a 3.5% stake in Adani Green Energy for $340 million.

“This transaction marks the continued confidence of global investors in the governance, management practices and the growth of Adani Portfolio of companies,” said Adani Group chief financial officer Jugeshinder Singh.

In the run-up to the announcement, Adani group shares rallied, with Adani Enterprises climbing nearly 35 per cent over the last three sessions, Adani Ports 11 per cent and Adani Green Energy 16 per cent. Adani Transmission rose 10 per cent in the previous two sessions.

“For the short-term, this will definitely be a big positive for the sentiment for Adani stocks given a chunk of shares being bought by big investors,” said Avinash Gorakshakar, head of research at Profitmart Securities.

“But in the longer term market is going to look at how growth is going to come.”

Jefferies India was the sole broker for GQC's transaction.

Updated: March 02, 2023, 5:40 PM