Adani empire’s shares surged on Friday after an Indian-led US boutique investment firm, GQG, buys a $1.87 billion worth stake in the group. That marks the first significant investment in the Indian business empire since Hindenburg’s report sparked a stock rout.
The US boutique investment firm’s stake purchases boosted billionaire Gautam Adani-led firms shares, which have plunged by over $130 billion in market value US-based and Australia-listed GQG has purchased shares in four Adani companies, including the group’s flagship firm Adani Enterprises, through block deals.
Founded in 1987 and headquartered in Fort Lauderdale, Florida, GQG manages $88 billion across equity funds.
According to a regulatory filing, GQG invested 3.4 per cent in Adani Enterprises for around $662 million, 4.1 per cent in Adani Ports for about $640 million, 2.5 per cent in Adani Transmission for about $230 million, and 3.5 per cent in Adani Green Energy for about $340 million.
GQG’s chairman and chief investment officer, Rajiv Jain, said “we believe that the long-term growth prospects for these companies are substantial”.
According to the CIO, before investing, GQG did a “deep dive” as part of due diligence.
The investment firm had conversations with the group’s vendors, bankers and partners, according to the CIO, who also said that infrastructure companies are subject to tight regulation and therefore the risk of fraud is low.
Jain added, “we actually disagree with (Hindenburg’s) report,” referring to a scathing report by the US research firm on January 24 accusing Adani Group of business and tax fraud.
Since Hindenburg’s allegations, the market value of seven listed Adani companies has plunged by about $135 billion. The organisation, headed by billionaire Gautam Adani, has denied those claims, but subsequently cancelled a $2.5 billion share sale.
The group, though, has been trying to reassure investors by using road shows and phone calls. A Reuters report showed the business empire has secured a $3 billion loan from a sovereign wealth fund.
But a separate report from Bloomberg showed the business denied that news. Gautam Adani-led firms have repaid loans to calm investors’ nerves. The prepayment of loans plan has helped Adani firms’ shares.
The group’s stocks extended their gains for the fourth straight day on Friday.
Shares of Adani Enterprises have jumped nearly 80 per cent from their recent lows, Adani Ports stock has surged 70 per cent, and shares of Adani Power have recovered by nearly 50 per cent. Shares in the rest of the group firms have risen between 18 and 28 per cent.
Separately, on the same day as the US boutique investment firm’s stake buy in the Adani Group, India’s top court asked market regulator SEBI to look into the Adani group for potential business violations and submit a report within two months.
The top court also constituted an expert committee to look into the regulatory mechanism and suggest measures to protect investors from step losses as seen in the Adani Group stock losses.
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