SYDNEY/BANGALORE, March 3 (Reuters) – Adani shares rose on Friday after it invested $1.87 billion in GQG Partners Inc Group.
The boutique investment firm bought shares, marking billionaire Gautam Adani’s first major investment in a conglomerate, after a critical report by a short seller saw seven of the Indian conglomerate’s listed companies lose about $130 billion in market value.
In a January 24 report, US-based Hindenburg Research cited high debt and alleged improper use of offshore tax havens, which Adani denied. A plunge in Adani shares later prompted the group to halt a $2.5 billion stake sale.
GQG’s deal “may confirm concerns about the group’s ability to raise funds to repay debts against the listed company’s shares,” analysts at Kodak Co. said.
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Adani Group will hold roadshows in London, Dubai and several US cities this month, according to a document seen by Reuters.
The document shows that meetings are scheduled for March 7 in Dubai, March 8 in London, and March 9-15 in several locations in the United States.
Adani did not immediately respond to Reuters’ request for comment.
Earlier this week, Adani told creditors it had secured a $3 billion loan from a sovereign wealth fund, two sources said.
India’s Supreme Court on Thursday asked market regulator Sebi to probe the board for any lapses in public shareholder norms or regulatory disclosures.
In total, the net debt of Adani Group companies totaled $24.1 billion as of September 2022.
“Yesterday’s share buying was a good market boost for Adani Group stocks, which saw long-term outperformance and widespread selling,” said Avinash Gorakshakar, head of research at Profitmart Securities.
GQG 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 and 2.5% of Adani Transmission Ltd ( 2.5%), Adani Companies said on Thursday. ADAI.NS) $230 million and 3.5% Adani Green Energy Ltd (ADNA.NS) $340 million.
Shares of flagship Adani Enterprises rose as much as 17.5% on Friday, while Adani Ports rose 10%. Adani Green Energy and Adani Transmission rose 5% each.
Dollar bonds issued by Adani companies also rallied, with Adani Green Energy’s 2024 bond adding 2.3 cents to trade at 85.5 cents on the dollar, while bonds issued by Adani Ports and SEZ, Adani Transmission and Adani Electricity Mumbai rose more than 1. Cent.
Sydney-listed shares of GQG, meanwhile, ended Friday down 3%, compared with a 0.4% rise in the benchmark index (.AXJO).
GQG Client Questions
GQG chairman and chief investment officer Rajiv Jain told Reuters the company had done a “deep dive” of its own into Adani and disagreed with Hindenburg’s statement.
However, the purchase has raised questions from GQG’s Australian pension fund client at a time when major investors, including Norway’s sovereign wealth fund, have been selling shares.
Florida-based GQG manages money under management totaling A$563 billion ($380.36 billion) on behalf of at least four major Australian pension funds.
Cbus Super, which has A$243 million in emerging markets with GQG, said it was trying to get a clearer picture of its Adani exposure.
“Based on Rajiv Jain’s past comments, he’s the type of investor who goes into places that have unrealistic value,” said Shawn Lehr, a Morningstar analyst who covers GQG.
“He obviously doesn’t run an ESG fund and, importantly, his investors are well aware of that,” he said, referring to GQG’s purchase of Adani, which has large coal assets and therefore does not fall under environmental, social and governance. Banner.
“There will be people who avoid buying GQG because of Rajeev’s results; there will be people who want to invest with them because of their good performance.”
Shares of GQG are up 3.58% so far this year, in line with the benchmark index.
Jain is the Founder, Chairman and Chief Investment Officer of GQG. According to his profile on GQG’s website, he also serves as a portfolio manager for all its strategies.
GQG listed on the Australian Stock Exchange in October 2021, raising A$1.18 billion, making it Australia’s largest listing for the year. Jain holds 68.8% stake.
($1 = 1.4802 Australian dollars)
Reporting by Scott Murdoch in Sydney, Nandan Mandeyam and Nishit Navin in Bangalore, Yusuf Saba in Dubai; Additional reporting by Praveen Menon; Editing: Christopher Cushing, Kim Coghill and Shaunak Dasgupta
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