Adani shares soar after investing $1.87 billion in GQG; More offers on the way

SYDNEY/BENGALURU (Reuters) – Adani shares rose on Friday after a $1.87 billion investment in the group by GQG Partners Inc eased concerns about the group’s ability to attract financing, while the group ran more roadshows to boost investor confidence. .

The stake purchase by the boutique investment firm was the first major investment in billionaire Gautam Adani’s conglomerate since a critical short-selling report led to seven of the group’s Indian companies losing about $130 billion in market value.

In a January 24 report, US-based Hindenburg Research cited high debt, alleged improper use of offshore tax havens, and stock manipulation, which Adani denied. Then, a dip in Adani shares prompted the group to delay a $2.5 billion share sale.

Analysts at Kotak Institutional Equity said the GQG deal “may allay concerns about the group’s ability to raise financing to repay loans against shares of its listed companies”.

A document seen by Reuters reports that the Adani Group will hold road shows this month in London, Dubai and several cities in the United States.

The document showed that the meetings are scheduled to take place in Dubai on March 7, London on March 8, and several US locations between March 9 and 15.

Al-Adani did not immediately respond to a Reuters request for comment.

Earlier this week, two sources familiar with the matter said Al-Adani told creditors that he had secured a $3 billion loan from a sovereign wealth fund.

India’s Supreme Court on Thursday asked market regulator SEBI to investigate the group over any loopholes relating to public ownership rules or regulatory disclosures.

Overall, the net debt of the Adani Group companies totaled $24.1 billion as of September 2022.

“Yesterday’s stake purchase was a good market support for Adani Group shares that have seen a long period of underperformance and sell-off,” said Avinash Gorakshekar, head of research at Profitmart Securities.

Adani Companies said Thursday that GQG has bought 3.4% of Adani Enterprises Ltd (ADEL.NS) for about $662 million, 4.1% of Adani Ports and Special Economic Zone Ltd (APSE.NS) for $640 million, 2.5% from Adani Transmission Ltd (ADAI.NS) for $230 million and 3.5% of Adani Green Energy Ltd (ADNA.NS) for $340 million.

Shares of flagship Adani Enterprises rose as much as 17.5% on Friday, while Adani Ports climbed 10%. Adani Green Energy and Adani Transmission both jumped 5% each.

Dollar bonds issued by aggressive entities also rose, with Adani Green Energy’s 2024 bond adding 2.3 cents to the dollar to trade at 85.5 cents, while most bonds issued by Adani Ports and Special Economic Zone, Adani Transmission and Adani Electricity Mumbai rose by more than 1 cent.

Meanwhile, Sydney-listed GQG shares ended Friday down 3%, compared to a 0.4% gain in the benchmark (.AXJO).

GQG Customer Inquiries

GQG chairman and chief investment officer Rajeev Jain told Reuters the company had done its own “deep research” into Adani and disagreed with the Hindenburg report.

However, the stake purchase raised questions from a client of GQG’s Australian Pension Fund, at a time when major investors, including Norway’s sovereign wealth fund, were selling the stock.

Florida-based GQG manages funds on behalf of at least four major 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 worth A$243m, said it was working to get a clear picture of its exposure in Adani.

“Based on Rajeev Jain’s previous comments, he’s the type of investor who goes wherever there is unrealized value,” said Sean Lear, an analyst at Morningstar, who covers GQG.

“It does not explicitly run an ESG fund and, more importantly, its investors are well aware of that,” he said, referring to GQG’s purchase of Adani, which has significant coal assets and therefore will not fall under ESG. Signboard.

“There will be people who avoid buying GQG because of Rajiv’s decisions; there will also be people who are willing to invest with them because they are doing so well.”

Shares of GQG are up 3.58% so far this year, in line with the benchmark.

Jen is the founder, chairman and chief investment officer of GQG. He also serves as the portfolio manager for all of its strategies, according to his profile on the GQG website.

GQG listed on the Australian Stock Exchange in October 2021, raising A$1.18 billion, making it the largest listing in Australia for the year. Jain retains 68.8% stake.

($1 = 1.4802 Australian dollars)

Additional reporting by Scott Murdoch in Sydney, Nandan Mandayam and Nachit Naveen in Bengaluru and Yusuf Saba in Dubai; Additional reporting by Praveen Menon; Editing by Christopher Cushing, Kim Coghill and Shounak Dasgupta

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