Bounce-back: Post-Hindenburg, Adani investor GQG sees 100% return

Virendra Pandit

New Delhi: The Adani Group’s value lies in its assets, a top world investor has said, as he predicted a 100 percent return on investment in the conglomerate.

Companies of the Adani Group, whose market capitalization plummeted by over USD 150 billion after the January 24 publication of the controversial Hindenburg Research report, are bouncing back. In the last couple of months, the Indian conglomerate has prepaid many of its debts to restore investors’ confidence.

One such investor is the US-based GQG Partners, which invested USD 2 billion in March, and is seeing returns of over 100 percent, the media reported on Wednesday.

Rajiv Jain, Chief Investment Officer of GQG Partners Inc, is among the biggest names in emerging-market investments, cut across the grain last month when he bought almost USD 2 billion worth of Adani Group stock.

Now, he has predicted that his bet on the Indian conglomerate is giving him a return in excess of 100 percent.

“These could be multi-baggers” over five years, Jain told Bloomberg, using the term used by mutual fund manager Peter Lynch about an investment that could at least double.

GQG Partners, the Florida-based firm, became the highest-profile champion of the Adani Group since it lost as much as USD 153 billion in market value after a little-known US-based short-seller, Hindenburg Research, accused the Indian conglomerate of stock-price manipulation and fraud.

But those allegations, which the Adani Group categorically denied, haven’t deterred Jain. The veteran investor of Indian origin has often pushed back against what he calls “comfort investing” — making decisions by committee rather than taking risks on undervalued public shares, the media reported.

As the Adani Group’s value lies in its assets, India is looking at it to improve the country’s infrastructure and lure manufacturing from places like China.

Many of the Adani Group’s projects are tethered to India’s development goals and cut across multiple sectors of the economy.

In particular, Jain pointed to Adani’s coal mining assets, data centers, and his majority stake in Mumbai’s busy international airport as signs of a healthy business.

“We believe the airport itself could be worth more than the company,” Jain said, as he noted that this land alone stretches across some of Asia’s most expensive urban real estate.

GQG Partners, which has a diverse portfolio, oversees over USD 90 billion, with investments in industries like oil, tobacco, and banking.

Jain said he remained unfazed after Hindenburg Research claimed fraud across the Adani Group and accused the conglomerate of “pulling the largest con in corporate history.”

Despite controversies and the market capitalization of the Adani Group plummeting, GQG acquired shares in four of the conglomerate’s firms from a family trust in March, showing how it treated the Hindenburg claims.

The Hindenburg report read like a “10-year-old newspaper,” Jain said. Over a 30-year investment career, “I’ve yet to come across a perfect company,” he said.

One of Hindenburg’s allegations is that by using a labyrinth of offshore accounts connected to the family, the group skirted the market regulator, the Securities and Exchange Board of India (SEBI)’s requirements that public shareholders own at least 25 percent of the stock. Adani has denied the claims.

“One of the issues raised was that he owns more than 75 percent of the company, right? And let me ask you in real simple English, is that fraud?” Jain said. “Is it not disclosed properly? Yeah, it’s some of that, you could argue that, but is it fraud?”