GQG Sees Adani Among Top Energy Transition Stories, May Buy More

Adani Group has been trying to shore up confidence in firms. GQG last week bought into stocks of four Adani companies.
Rajiv Jain, chairman and chief investment officer of GQG Partners LLC, speaks during a Bloomberg Television interview in New York, U.S., on Tuesday, Nov. 14, 2017.
Rajiv Jain, chairman and chief investment officer of GQG Partners LLC, speaks during a Bloomberg Television interview in New York, U.S., on Tuesday, Nov. 14, 2017.

Star investor Rajiv Jain said his US-based fund will likely increase its stakes in besieged Indian billionaire Gautam Adani’s firms over time, reiterating his confidence in the ports-to-power conglomerate after investing $1.9 billion last week.

“This is one of the best energy transition stories you can buy, one of the best infrastructure assets you can get in India,” GQG Partners Chairman Jain said on a call with reporters in Australia Wednesday. “Our view is we need to buy companies that are part of the solution.”

The fund manager’s comments may bolster investor sentiment around Adani Group, which has faced a massive stock rout in the past few weeks after a scathing report from an American short seller. The tycoon made his early fortune in coal trading but has been pivoting toward renewable energy in the last few years, with ambitious plans to invest $70 billion by 2030 across the green energy value chain.

“We feel these are unique assets,” Jain said, adding that over time GQG may raise its stake in Adani Group companies. “This is truly a long term investment and chances are we will probably buy more because we are not at full size at this point.”

Jain has been meeting with investors, including pension funds, in Melbourne this week and will spend the next two days in Sydney.

Show of Support

GQG Partners bought shares in four firms from an Adani family trust last week — the most significant show of support for Adani from a major money manager since Hindenburg Research’s Jan. 24 report that alleged accounting fraud and share-price manipulation that spurred a steep sell off. 

Despite the Adani Group denying these allegations, the rout continued and at its worst, had lopped off more than $150 billion off its market value. Adani Group stocks have recovered some ground in the past few days. 

Shares of all 10 companies, controlled by the tycoon, closed higher in Mumbai on Wednesday, with six advancing by almost 5%, data compiled by Bloomberg show.

The conglomerate has spent the past few weeks attempting to assuage investor concerns about the corporate governance and indebtedness at the conglomerate.  

Adani, who lost his spot as Asia’s richest person, and his aides have so far junked a $2.5 billion share sale by the flagship Adani Enterprises Ltd., scrapped new acquisitions, announced plans to repay debt, reined in capital spending as well as hired top-shelf US crisis communication and legal teams.

The billionaire and his family prepaid $902 million worth of borrowings backed by shares on Tuesday. A month back, founders paid $1.1 billion early to release their pledged shares across Adani Group companies.

Investor Roadshows

The group also held recent investor roadshows in Singapore and Hong Kong as part of its confidence-building measures and is holding more of these gatherings in London and US in coming days.

The fund got an “opportunity to initiate positions and over time the size will increase,” Jain said, while discussing the Adani conglomerate which has been on a breakneck expansion spree across sectors. “They are incredibly well positioned from airports to ports to transmission and distribution, toll roads, bridges.”

Investors Jain has spoken with this week reacted more positively than he expected to GQG’s investment in the Indian group that was battered by the short seller’s report.

“The meetings were very constructive,” said Laird Abernethy, GQG’s managing director for Australia and New Zealand. “It’s not a position that the herd is following.”

--With assistance from .

(Updates with Adani stocks reaction in the eighth paragraph.)

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Disclaimer: Adani Enterprises is in the process of acquiring a 49% stake in Quintillion Business Media Ltd., the owner of BQ Prime.

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