GQG, other investors buy USD 1 billion stake in Adani group firms

US-based boutique investment firm GQG Partners and other investors have bought close to USD 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 (June 28) trading.

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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 USD 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 (USD 1.87 billion) in four group companies to GQG Partners. GQG ramped up that investment with an additional purchase of shares worth USD 400-500 million in May.

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GQG investments anchored the Adani groups recovery from the losses sparked by Hindenburg, though all 10 companies are still trading below the levels before the January 24 report.

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 Tuesdays 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.

In May, boards of Adani Enterprises Ltd and electricity transmission company Adani Transmission Ltd approved raising up to Rs 21,000 crore (over USD 2.5 billion) through share sales to qualified institutional investors.

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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 groups expansion projects.

(With agency inputs)