NEW DELHI, June 29 (PTI): US-based boutique investment firm GQG Partners and other foreign investors have bought close to $1 billion of additional stakes in Adani Group companies as billionaire Gautam Adani continues to rebuild market confidence since hit by a damning report of a US short seller.
The investors bought 18 million, or 1.6 per cent, from the Adani family in the group’s flagship Adani Enterprises Ltd in a single block trade. In the renewable energy firm Adani Green Energy, a total of 35.2 million shares, or 2.2 per cent, changed hands, sources aware of the matter said.
Stock market data showed large block trades in both companies in early Wednesday trading.
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The sources said foreign investors have purchased promoter stakes worth $500 million in each of the two companies.
GQG Partners has been ramping up its investment in the conglomerate ever since Hindenburg Research in a bombshell report alleged accounting fraud and stock price manipulation at the Group, triggering a stock market rout that had erased about $150 billion in its market value at its lowest point.
Adani Group has denied all allegations by Hindenburg and is plotting a comeback strategy that includes recasting its ambitions, scrapping acquisitions, pre-paying debt to address concerns about its cash flows and borrowings, and scaling back its pace of spending on new projects.
In March, promoters sold stakes worth Rs 15,446 crore ($1.87 billion) in four group companies to GQG Partners. GQG ramped up that investment with an additional purchase of shares worth $400-500 million in May.
GQG investments anchored the Adani group’s recovery from the losses sparked by Hindenburg, though all 10 companies are still trading below the levels before the January 24 report.
The sources said the block trade in Adani Enterprises was transacted at Rs 2,300, a premium to its closing price of Rs 2,281.75 on the BSE on Tuesday. For Adani Green, the trades were priced at Rs 920 to Rs 924.75, a discount to Tuesday’s closing price of Rs 959.90.
On Wednesday, Adani Enterprises closed 5.3 per cent higher at Rs 2,403.65 but Adani Green fell as much as 6.8 per cent before erasing most of its losses to trade 0.16 per cent lower at Rs 958.40.
Of the $1.87 billion that GQG first invested on March 2, $1 billion was in Adani Enterprises ($640 million) and Adani Green Energy Ltd ($330 million).
Later, it also did some open market purchase in the group companies in the following months.
While the previous purchase was at Rs 1,410 per share in Adani Enterprises, Wednesday’s acquisition was at Rs 2,300, they said. GQG now holds 4.96 per cent in the company worth Rs 13,600 crore or $1.65 billion.
Similarly, in the case of Adani Green Energy Ltd, the previous acquisition was at Rs 504 per share and Wednesday’s purchase was at Rs 920. The 6.32 per cent holding is now worth Rs 9,600 crore or $1.17 billion.
In May, boards of Adani Enterprises Ltd and electricity transmission company Adani Transmission Ltd approved raising up to Rs 21,000 crore (over $2.5 billion) through share sales to qualified institutional investors.
This comes after Adani Enterprises was forced to abort a Rs 20,000 crore follow-on public offering (FPO) in the wake of the Hindenburg report.
The offer was fully subscribed but the company returned the money to subscribers. The sources said the company stock which was offered in the price range of Rs 3,112 to Rs 3,276 in the FPO is now available at a much lower price.
The funds that Adani Group is raising will be used to pare debt as well as fund the group’s expansion projects.
The sources said GQG’s bet on Adani was primarily because of the conglomerate emerging as the largest and fastest-growing critical infrastructure developer. Adani portfolio offers a one-stop play for India’s growing infrastructure theme, with no equivalent alternative.
The group’s flagship and incubator Adani Enterprises Ltd is developing businesses like airports, roads (transport and logistics), data centres, copper and green hydrogen, which could lead to massive value unlocking over the next 5 to 15 years for its investors, they said.
Its incubator model has a 100 per cent success rate of creating unicorns and has built unicorns like Adani Transmission, Adani Power, Adani Ports & SEZ. The combined market capitalisation of these four companies alone stands at $62 billion – almost twice that of the incubator.
The management in the recent past has said that they will be separately listing airports and road businesses in the next 3-4 years.
Adani Green has emerged as the largest and fastest-growing renewable energy player in India. Its green capacities have grown at 33 per cent CAGR over the past five years, outpacing the industry average of 15 per cent.
