Adani investor GQG's shares down by 13% after analyst downgrades stock

Swiss bank UBS downgraded GQG's stock rating from 'buy' to 'neutral' on Monday and reduced its price target from A$3.30 to A$2.30

Shares of Australian-listed boutique investment firm GQG Partners, a prominent investor in the Adani Group, fell 13 per cent on Monday after Swiss bank UBS downgraded the stock. According to Reuters, UBS said GQG Partners may have lost A$600 million ($390 million) in funds in the two days after the US Department of Justice levelled bribery charges against Gautam Adani and seven other company associates.

 

UBS downgraded GQG’s stock rating from ‘buy’ to ‘neutral’ and reduced the stock’s price target from A$3.30 to A$2.30.

 

Backing Adani amid turmoil

 

As of November 21, 2024, GQG Partners had an exposure of $8.1 billion to Adani Group companies, representing approximately 5.2 per cent of its total assets under management of $156.7 billion. The firm has stood in solidarity with the Adani Group even as other investors, including French energy giant TotalEnergies, paused investment in the embattled firm.

 

UBS’s analysts said they were ‘largely comfortable’ with the investment performance implications for GQG from its Adani exposure. However, they noted that the Australian-listed firm experienced weaker fund inflows during November before the indictment of Adani Group executives, adding that the company was likely to experience slow funds growth in the near term.

 

Bribery allegations against Adani

 

US prosecutors have indicted Gautam Adani, his nephew Sagar Adani, and six others for allegedly paying $265 million in bribes to unknown Indian government officials to secure solar power contracts for Adani Green in Andhra Pradesh, India. The group is accused of disguising the bribes as ‘development fees’ and misleading US investors about its anti-bribery practices. These misrepresentations reportedly helped the company raise over $3 billion from 2021 to 2024.

 

Gautam Adani has denied any wrongdoing and said his conglomerate was committed to “world-class regulatory compliance”. On Monday, shares of Adani Green Energy rose as much as 9.4 per cent to recoup all its losses since the indictment.