MUMBAI: GQG Partners, a major foreign investor in the Adani group companies, has initiated defensive measures to safeguard its share price following the fallout from a US investigation into the Ahmedabad-based conglomerate.
The Sydney-listed fund initiated a $65 million share buyback programme, citing the potential presented by the significant drop in its stock value.
Assembly Election Results
GQG’s shares fell 19% on Nov 21 after US authorities’ allegations that the Adani group deceived investors by concealing its participation in a $265-million bribery scheme aimed at securing profitable business contracts in India.
US-based GQG – established by India-born Rajiv Jain and Tim Carver in June 2016 – holds investments of $4.5 billion (Rs 41,330 crore) in the Adani group companies. Its shares showed partial recovery on Friday, closing 4% higher on Australia’s ASX exchange following the share repurchase announcement. At 2.2 Australian dollar, the stock remains 16% below Wednesday’s closing price. GQG’s current market value stands at about $77 million.
“We believe our stock is undervalued and this is a great investment opportunity,” GQG chief executive Tim Carver said. “We have a strong balance sheet and GQG believes in the strength of its business. We’re happy to buy our stock at these values,” Carver said.
GQG became a significant investor in Adani group companies after their stock fell in March 2023. It invested Rs 15,446 crore ($1.87 billion) in four Adani group companies – Adani Enterprises, Adani Ports, Adani Green and Adani Energy Solutions – as the conglomerate sought recovery following the Hindenburg Research report’s release in Jan 2023.
The fund currently holds positions in six Adani group companies, with stakes between 2% and 5%. On Thursday, it disclosed that less than 10% of its clients’ assets are exposed to the Adani group following the US bribery allegations. GQG indicated it is reviewing its Adani group portfolio and watching developments regarding the US prosecutors’ claims against Adani group chairman Gautam Adani and certain group companies.
GQG owns 2.1% in Ambuja Cements, 3.5% in Adani Enterprises, 4.1% in Adani Ports, 4.2% in Adani Green Energy, 4.7% in Adani Energy Solutions, and 5.1% in Adani Power. The fund, managing $161 billion in assets, said Friday that the on-market buyback acknowledges current market volatility and will enable strategic acquisition of its chess depository interests (CDIs). These CDIs are instruments on the Australian Stock Exchange allowing non-Australian companies to list shares and utilise exchange settlement systems.