US-based boutique investment firm GQG Partners has ramped up its shareholding in two Adani group companies to more than 5 per cent in signs of its confidence in the group despite the damning report of a US short seller.
On June 28, GQG bought $1 billion (Rs 8,265 crore) worth of additional stakes in the group's flagship Adani Enterprises Ltd and renewable energy firm Adani Green Energy Ltd.
The stake sale in Adani Enterprise was through one block deal, where GQG bought 1.79 crore, or 1.58 per cent, more shares to take its holding to 6.15 crore shares or 5.4 per cent of the total, according to stock exchange filings.
A separate filing showed that billionaire Gautam Adani and his brother Rajesh S Adani had sold the shares of the promoter family. This has reduced the Adani family's stake in Adani Enterprises to 67.65 per cent from 69.23 per cent previously.
In Adani Green Energy, GQQ bought 4.47 crore or 2.82 per cent additional shares to take its holding to 10.35 crore shares or 6.54 per cent of the total, the filings showed.
The filings did not give the acquisition price, but sources aware of the matter said the investor 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.
Prior to the June 28 acquisition, GQG held 4.35 crore shares or 3.82 per cent in Adani Enterprises Ltd and 5.88 crore shares or 3.72 per cent in Adani Green Energy Ltd.
GQG investments have 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 per share, a premium to its closing price of Rs 2,281.75 on the BSE on June 27. For Adani Green, the trades were priced at Rs 920 to Rs 924.75, a discount to the June 27 closing price of Rs 959.90.
On Friday, Adani Enterprises closed at Rs 2,383.60, while Adani Green ended at Rs 945.60 on the BSE.
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 purchases in the group companies in the following months.
The previous purchase was at Rs 1,410 per share in Adani Enterprises, and that in Adani Green Energy Ltd was Rs 504 per share.
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.
The share sales come months 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 funds that Adani Group is raising will be used to pare debt and 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's 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 and 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.
Currently, the size of its renewable energy portfolio stands at 20.4 GW (8.2 GW operational and another 12,2 GW under construction and near construction projects). It is targeting a 45 GW portfolio by 2030.