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Four firms under India's embattled Adani Group saw their share prices surge on Friday after global investor GQG Partners bought stakes for $1.87 billion, allaying concern about Adani's ability to attract funds.
The stake purchases comprised the first major investment in billionaire Gautam Adani's conglomerate since a short-seller's critical report resulted in seven of the Indian group's listed firms losing more than $130 billion in market value, reports Reuters.
In the January 24 report, US-based Hindenburg Research noted high debt and alleged improper use of offshore tax havens and stock manipulation - which Adani denied. A dive in Adani stocks then prompted the group to shelve a $2.5 billion share sale.
GQG's deal "may assuage concerns about the group's ability to raise funding for the repayment of loans against its listed company shares," said analysts at Kotak Institutional Equities.
Overall, Adani Group firms' net debt totalled $24.1 billion as of September 2022. Since the report, the group has sought to reassure investors with road shows and calls with bondholders.
"The stake buying yesterday was a good market booster for Adani Group stocks which have seen a long spell of underperformance and widespread selling," said Avinash Gorakshakar, head of research at Profitmart Securities.
Adani firms on Thursday said GQG bought 3.4 per cent of Adani Enterprises Ltd for about $662 million, 4.1 per cent of Adani Ports and Special Economic Zone Ltd for $640 million, 2.5 per cent of Adani Transmission Ltd for $230 million, and 3.5 per cent of Adani Green Energy Ltd for $340 million.
On Friday, shares of flagship Adani Enterprises rose as much as 11.4 per cent, while Adani Ports surged 8.1 per cent. Adani Green Energy and Adani Transmission jumped 5 per cent each in intraday trade.
GQG's Sydney-listed shares ended Friday down 3 per cent versus a 0.4 per cent rise in the benchmark share price index.
GQG Chairman and Chief Investment Officer Rajiv Jain told Reuters the Florida-based firm had carried out its own "deep dive" into Adani and disagreed with Hindenburg's report.
"Based on past comments of Rajiv Jain, he is the type of investor that goes for wherever there is unrealised value," said Morningstar analyst Shaun Ler who covers GQG Partners.
"He does not explicitly run an ESG fund, and importantly, his investors are well aware of that," he said, in reference to GQG buying into Adani which has major coal assets and so would not fall under the environmental, social and governance banner.
"There will be people who avoid buying GQG due to Rajiv's decisions; there will also be those who want to invest with them given their good performance."
GQG stock is up 3.58 per cent so far this year, in line with the benchmark.
Jain is founder, chairman and chief investment officer at GQG. He also serves as portfolio manager for all of its strategies, showed his profile on GQG's website.
GQG listed on Australia's stock exchange in October 2021, raising A$1.18 billion ($794.97 million), making it Australia's largest listing for the year. Jain retains a 68.8 per cent stake.