Mumbai : Adani family sold through their trust 15,446 crore of its stake in the four group companies to GQG Partners, a US-based investment firm set up by investment manager Rajeev Jain. Fund managers said the transaction would provide much-needed relief to the group’s promoters and its shares, which have fallen since the release of the US short-sellers report alleging stick manipulation and accounting fraud.
The shares were sold through a series of secondary block transactions involving Adani Ports, Adani Green Energy, Adani Transmission and Adani Enterprises, the group said in a statement to the stock exchanges. Earlier on Thursday, Adani Enterprises officially denied reports a day earlier of securing a $3 billion credit line from a sovereign wealth fund. Adani Enterprises had pulled up a month ago 20,000 crore follow-on public offer, which had a floor price of Rs. 3,112 each, as a result of the Hindenburg Research report. At the acquisition price of Adani Enterprises’ GQG 1,410.86 on Thursday, a 10% discount from Wednesday’s closing price. Shares of Adani Enterprises rose 2.75% after the deal, while Adani Ports gained 3.45%, and Adani Green and Adani Transmission hit the upper circuit of 5% at the close.
Florida-based GQG Partners, founded by Jain in 2016, acquired a 3.39% stake in Adani Enterprises. 5,460 crore, 4.1% in the value of Adani Ports 5,282.33 crore for 3.51% stake in Adani Green 2,806 crore and 2.5% stake in Adani Transmission Value 1,898 crore from SB Adani Family Trust. Shares rose after changing hands in morning deals. A fund manager described the deal as “a value proposition” for GQG, which held 1.42% in India’s largest mortgage financier, Housing Development Finance Corp, and 1.29% in FMCG major ITC Ltd, at the end of December 2022 . He called the deal a brokerage. Touted by Jefferies as a “major coup” that could give “vital credibility” to the beleaguered conglomerate, thanks to “marquee investment genius Jain”.
“I am excited to start positions at Adani companies,” Jain said. We believe these companies have substantial long-term growth potential, and we are happy to invest in companies that will help advance India’s economy and energy infrastructure, including their energy transformation, over the long term. ”
The impact of GQG’s buying was felt in other six listed stocks, which rose for the second straight session after a January 24 Hindenburg Research report.
The total market capitalization of the group’s shares increased 30,226 crore on NSE on Thursday. Since the release of the report on February 24, shareholder wealth has fallen by three-fifths 7.86 trillion to 19.22 trillion.
However, the purchase of GQG’s stake is seen as alleviating concerns for the promoter group and stabilizing the group’s share prices.
“The purchase by GQG provides much-needed liquidity to the family and offsets the negative impact on stock prices, at least for now,” said a money manager.
Another well-known fund manager who knows GQG founder Rajeev Jain said that there has been extreme volatility in stocks since the Hindenburg report and some stability will come.
Jyotivardhan Jaipuria, managing director, Valentis Advisors, declined to comment on the stocks, saying Jain has an “excellent track record”.
Jain served as CIO of global investment firm Vontobel before leaving to form GQG Partners.
“This transaction reflects the continued confidence of global investors in the governance, management practices and growth of Adani’s portfolio of companies,” said Jugeshinder Singh, Group Chief Financial Officer, Adani Group.
Earlier, in a communication sent to the exchanges, Adani Enterprises said, “We would like to clarify that this news appears to be a market rumour, and hence it would be inappropriate for us to comment on the same.”
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