GQG Partners acquires $1.9 billion stake in Adani Group

Florida-based GQG Partners has raised a $1.9 billion total stake by Gautam Adani eponymous group of energy and infrastructure companies, accused Hindenburg Research in January to commit what may be “the biggest corporate fraud in history”.

Trading in the secondary market does not directly raise capital, but it can be a great way to increase the confidence of the 60-year-old trader, once the second richest man in the world.

Adani Group finance chief Robbie Singh hailed it as a “landmark” deal that demonstrates the “continued confidence of global investors in the management, governance practices and growth” of the industrial conglomerate.

Rajiv Jain, chairman and chief investment officer of GQG Partners, went to personally give his stamp of approval to the group’s embattled patriarch.

“Gautam Adani is widely regarded as one of the best entrepreneurs of his generation,” says Jain in the joint statement.

GQG acquired small interests in four different Adani companies ranging between 2.5% and 4.1% of the companies, which among other assets own and operate the largest airport and port in India.

The largest single investment was a $662 million purchase of shares in Adani Enterprises, the group’s flagship tasked with helping India become more economically self-reliant.

“Adani companies own and operate some of the largest and most important infrastructure assets across India and around the world,” added Jain.

Who is Rajiv Jain?

Born and raised in India, Jain moved to the United States in 1990 to pursue a master’s in business administration at the University of Miami.

After joining the New York-based asset management arm of Bank Vontobel as a portfolio manager, Jain was appointed chief investment officer in January 2002. He continued to build the business from under $400 million in assets under management (AUM) at that time to almost $50 billion by the time he left in 2016.

Rajiv Jain is everything Cathie Wood is not https://t.co/AJiOQNGYA2

– Bloomberg (@business) February 22, 2023

He had an important role for the Swiss bank whose stock collapsed the day it was exposed Jain Quitting to go into business for himself.

“Simply put, Rajiv Jain is the face of Vontobel asset management in New York,” an analyst at Zuercher Kantonalbank said. at that timelowering the stock.

A star investment fund manager is characterized by a Feb. 23 profiles through Bloomberg as “everything that isn’t Cathie Wood”.

What is GQG Partners?

In June 2016, Jain went on to co-found GQG Partners with Tim Carver. Within a yearthe duo is now trusted to manage $5 billion.

Although not a household name like ARK Invest’s Wood, Jain used his list of contacts to quietly build a company with $92 billion in AUM at the end of January.

While it is headquartered in Florida hotspot Ft. Lauderdale, it chose October 2021 to list its shares in Australia, a resource-heavy equity market known for catering mining and energy companies such as BHP Billiton and Rio Tinto and their investors.

The fund management firm, which specializes in emerging markets, currently has a market cap of AUD $4.23 billion, or $2.9 billion.

In January, Jain informed clients that his firm’s investment portfolio was underweight in the US technology sector, a favorite of Wood’s.

“With high sales expectations but sluggish IT budgets, the return to that space can be disappointing,” he wrotewarning of a “dark outlook for income” where the odds are not favorable to investors.

What has been the reaction to GQG’s decision to invest in Adani?

Hindenburg Research by Nate Anderson, a short seller best known for fraud disclosure of Nikola Motors, accused the Indian conglomerate of decades of corporate malfeasance, allegations the group denies.

However, it failed to prevent nearly $120 billion in value from being wiped out from the seven listed companies. almost all nightwith Gautam Adani’s personal fortune falling in the process.

We believe that the Adani Group has committed a massive, blatant fraud in broad daylight in large part because investors, journalists, citizens and even politicians are afraid to speak about the obvious, for fear of reprisals. . (54/x)

– Hindenburg Research (@HindenburgRes) January 25, 2023

Early last month Adani forced to shelve a fully subscribed equity hike that would have raised $2.5 billion for his companies. Shortly after this halved its growth target and scaled back capital spending plans in an effort to save money.

Due to the controversy surrounding the company, GQG Partners reached out to clients to explain the rationale for investing in such potential. risky assetsaccording to Reuters.

“There is a very high level of uncertainty about what the stake means, whether they understand the risk they are facing,” said Tribeca Alpha Plus Fund manager Jun Bei Liu.

Shares in GQG Partners fell 3% on Friday, underperforming the broader Australian equity market, after the news.

In an interview with Bloomberg held just days before the investment, Jain dismissed the charges leveled at Adani as “a lot of hot air”, and dismissed the idea that the conglomerate could be India’s biggest fraud case since Satyam Computer Services more than a decade ago.

“These are regulated assets, you can verify many of these income streams from other areas,” he said. on February 23. “So I don’t think it’s Enron, or Satyam for that matter.”

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