GQG Partners reaffirms confidence in Adani group despite US indictment

Boutique investment firm GQG Partners has reiterated its confidence in Adani group companies amid the charges levelled by US prosecutors against the group’s chairperson Gautam Adani, his nephew Sagar Adani, and other executives.

 

“We recognise the distinction between the allegations against individuals and the companies. We believe the fundamentals of the companies we are invested in remain sound,” said GQG Partners in a statement explaining its stance after the charges in the US.

 

GQG Partners had emerged as a white knight for the group during troubled times following the allegations by short-seller Hindenburg Research in January 2023, which led to a sharp loss in the market value of Adani companies.

 

The asset manager said its exposure to the ports-to-power conglomerate stood at $8.1 billion, only 5.2 per cent of its total assets of nearly $157 billion as of November 21.

 

“We believe this level of exposure is manageable, even given the volatility in Adani group stocks,” GQG said, noting that it had positive returns on its investments in Adani companies.

 

The investment manager believes that any action from Indian regulators is unlikely and that the Indian government will maintain its support for Adani as he is the “most important infrastructure developer” in the country.

 

“We think it is unlikely that Indian regulators will take action in this matter given the thorough review of the Adani group following the Hindenburg allegations. However, we will be monitoring any developments closely,” said GQG.

 

While GQG has noted that the allegations are serious, it highlighted that many global companies and executives have faced similar allegations in the past—including those under the Foreign Corrupt Practices Act (FCPA).

 

“As we do with other holdings, our team continues to conduct research and reassess the situation, but as of now, we have not changed our view on the prospects for these investments. That may change as new information becomes available,” it added.

 

In its statement, GQG highlighted that the charges were specific to Adani Green and that the indictment is of the employees, not the company.

 

In March 2023, GQG invested in five companies of the Adani group, including flagship Adani Enterprises, Adani Ports & SEZ, Adani Green, Adani Energy Solutions, and Ambuja Cements. The firm later added exposure to Adani Power and Adani Total Gas.

 

The investment manager’s stake in various listed companies of the Adani group ranges between 3 per cent and 5 per cent. The shares of GQG Partners fell more than 25 per cent on the day the US indictment was first made public.

 

GQG has also indicated the potential impact of a change in power at the US federal government.

 

“The indictment is happening during a period of transition for the US federal government, which means the case will likely continue under a new Justice Department appointed by the Trump administration,” said GQG.