Australia-listed investment firm GQG Partners and other investors have bought around $1 billion of additional stakes in India’s Adani Group companies, a report by the Economic Times newspaper said on Wednesday. The report added that the investors had bought a 2.2 percent stake comprising 35.2 million shares in Adani Green Energy Ltd and a 1.6 percent stake comprising 18 million shares in Adani Enterprises Ltd in block deals.
GQG had invested $1.9 billion in the ports-to-power conglomerate in March and ramped up its investments in May. Its latest investment is separate from a planned qualified institutional placement (QIP) by the group company Adani Transmission Ltd. Promoters will use the QIP funds to prepay debt and fund the group’s expansion projects.
The QIP will be priced at Rs 3,128 to Rs 3,276 per share, which is lower than the prevailing market price. The issuance will also have a bonus issue of the same number of shares at a discount to the offer price. The offer was fully subscribed on Wednesday.
Bankers said GQG’s bet on Adani was based on the group emerging as the most significant and fastest-growing critical infrastructure developer. They said the group’s portfolio provides a one-stop play for India’s growing infrastructure theme. They said GQG did a “deep dive” on the group’s assets and business.
However, Morningstar analyst Shaun Ler said that GQG’s chief investment officer Rajiv Jain doesn’t run an ESG fund, and his investors know this. He noted that the fund buys into a group with significant coal assets.
The stock of Adani Enterprises rose 4 percent on Wednesday, led by a rise in shares of its subsidiary Adani Green Energy, after a report said that US-based GQG Partners and Abu Dhabi-based IHC had bought stocks worth $1 billion through block deals. During the day, 1.8 crore shares of Adani Enterprises and 2.52 crore of its renewable energy unit traded in bulk deals.
The move comes as the group’s flagship Adani Ports and Special Economic Zone Ltd seeks to revive its fortunes after a sharp selloff triggered by a US short-sellers critical report in January. The group’s other listed firms have also been hit by a slowdown in the global economy and the fading of its megaproject ambitions. Recovery will likely be slow and ad hoc, with key markets like the US and Europe still in recession. The group is expected to take a long time before it can finance its pipeline of projects. The government’s infrastructure support program has yet to take off, and banks are reluctant to lend. As a result, the group has been renegotiating with its lenders. The banks have also been tightening their credit terms and raising collateral requirements for lending to the group. The group has had to postpone projects and delay borrowing plans. Falling commodity prices are also hurting its financial position.
