US-based GQG, other investors invest $1.1 billion for 8.1 per cent stake in Adani Power

US-based boutique investment firm GQG Partners along with other investors on Wednesday bought an 8.1 per cent stake in Adani Power Ltd for over Rs 9,000 crore (USD 1.1 billion) as the marquee investor shrugged off damning report of a US short seller to invest in billionaire Gautam Adani’s group.

GQG Partners and other investors bought 31.2 crore shares of Adani Power in a block deal — one of the largest-ever secondary market equity transactions — stock market data showed. Adani Power is the fourth firm of the ports-to-energy conglomerate where GQG has invested since May.

Promoter Adani family, which held 74.97 per cent in the firm, sold 31.2 crore or an 8.1 per cent stake at an average price of Rs 279.17 per share. GQG Partners Emerging Markets Equity Fund and Goldman Sachs Trust II-Goldman Sachs GQG Partners Intl Opportunities Fund bought 15.2 crore shares at Rs 279.15 apiece, according to the stock market data.

GQG Partners has been increasing its stake

The US-based investment firm, which started investing in the Adani Group in early March when the group was reeling under damaging allegations made by short-seller Hindenburg Research, has been increasing its stake in group companies.

GQG had previously picked up a 5.4 per cent stake in Adani Enterprises, a 6.54 per cent stake in Adani Green Energy Ltd and a 2.5 per cent stake in Adani Transmission Ltd. Adani Power is one of India’s strategic energy and power producer. The transaction is the first of its kind in India between an investor and a promoter group.

Sources said the investment highlights the intrinsic strength of Adani Group’s diversified business ventures but also stands as an endorsement of the Group’s commitment to the highest standards of governance. Furthermore, the success of this investment programme underscores the Group’s unparalleled ability to raise substantial funds seamlessly across all its portfolio of companies.

Hindenburg Research, in a bombshell report in January, alleged accounting fraud and stock price manipulation at the group, triggering a stock market rout that had erased about USD 150 billion in its market value at its lowest point.

Adani Group quashes Hindenburg’s allegations

Adani Group has denied all allegations by Hindenburg and is plotting a comeback strategy that includes recasting its ambitions, scrapping acquisitions, pre-paying debt to address concerns about its cash flows and borrowings, and scaling back its pace of spending on new projects.

In March, promoters sold stakes worth Rs 15,446 crore (USD 1.87 billion) in group companies to GQG Partners. GQG ramped up that investment with an additional purchase of shares worth USD 400-500 million in May.

Adani family had raised USD 1.38 billion (Rs 11,330 crore) through stake sale in the three portfolio companies — Adani Enterprises Ltd, Adani Green Energy Ltd and Adani Transmission Ltd. In addition, the three portfolio companies have received board approvals for primary issuances through a share sale to investors.

Adani Enterprises Ltd plans to raise Rs 12,500 crore through share sale to investors while Adani Transmission plans to mop up Rs 8,500 crore. Adani Green Energy plans to raise Rs 12,300 crore.

Investments have been in key Adani group firms that are linked to India’s ongoing energy transition. Adani Enterprises is incubating the green hydrogen projects while Adani Green Energy is the renewable energy arm that is building 45 GW of capacity by 2030. Adani Transmission lays lines to wheel such power.

The Group’s 360-degree energy suite encompasses renewables, power generation, transmission and gas, reflecting a well-rounded perspective on India’s dynamic energy landscape. India stands at a crucial juncture, balancing its colossal energy demands with global sustainability commitments.

The share sales come months after Adani Enterprises was forced to abort a Rs 20,000 crore Follow-on Public Offering (FPO) in the wake of the Hindenburg report. The offer was fully subscribed but the company returned the money to subscribers. The funds that Adani Group is raising will be used to pare debt and fund the group’s expansion projects.

Why GQG invested in Adani Group?

The sources said GQG’s bet on Adani was primarily because of the conglomerate emerging as the largest and fastest-growing critical infrastructure developer.

Adani’s portfolio offers a one-stop play for India’s growing infrastructure theme with no equivalent alternative.

The group’s flagship and incubator Adani Enterprises Ltd is developing businesses like airports, roads (transport and logistics), data centres, copper and green hydrogen, which could lead to massive value unlocking over the next 5 to 15 years for its investors, they said.

Its incubator model has a 100 per cent success rate of creating unicorns and has built unicorns like Adani Transmission, Adani Power and Adani Ports & SEZ.

The combined market capitalisation of these four companies alone stands at USD 62 billion — almost twice that of the incubator. The management, in the recent past, has said that they will be separately listing airports and road businesses in the next three to four years. 

Adani Green has emerged as the largest and fastest-growing renewable energy player in India. Its green capacities have grown at 33 per cent CAGR over the past five years, outpacing the industry average of 15 per cent. Currently, the size of its renewable energy portfolio stands at 20.4 GW (8.2 GW operational and another 12,2 GW under construction and near construction projects). It is targeting a 45 GW portfolio by 2030.

(With PTI inputs) 

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