Image source- Hindustan times
US-based boutique investment firm GQG Partners has experienced a substantial drawdown in profits on its investments in the Adani Group, following reports of a US probe into the conglomerate. GQG Partners saw its profit decline by nearly Rs 4,500 crore ($615 million) as a result of the investigation, which is examining the representations made by the Adani Group to its American investors. The probe was initiated following a scathing report by US short seller Hindenburg Research, alleging financial misconduct by the conglomerate. Consequently, Adani Group’s market capitalization plummeted by Rs 55,000 crore ($7.5 billion), marking its largest single-day drop in four months.
GQG Partners’ Investments and Losses:
In March, GQG Partners, led by Rajiv Jain, invested $1.87 billion in shares of four Adani Group companies. The firm purchased 38,701,168 shares of Adani Enterprises at Rs 1,410.86 apiece, amounting to Rs 5,460 crore ($744 million). By May, the value of GQG Partners’ investment in Adani Enterprises had soared to Rs 10,679 crore ($1.45 billion) after a Supreme Court-appointed committee found no regulatory failure on the part of SEBI regarding Adani Group. However, as of June 23, the value of the holding had fallen to Rs 8,644 crore ($1.18 billion), resulting in a notional loss of Rs 2,035 crore ($277 million) on the profits gained since May.
Similarly, GQG Partners bought 88,600,000 shares of Adani Ports at Rs 596.20 apiece for Rs 5,282 crore ($719 million). The investment value peaked at Rs 6,959 crore ($948 million) before declining to Rs 6,328 crore ($861 million), reflecting a decrease in holding value of Rs 631 crore ($86 million). The firm also invested in Adani Green Energy and Adani Transmission, experiencing losses of Rs 639 crore ($87 million) and Rs 1,152 crore ($157 million) respectively on the value of their holdings.
Impact on GQG Partners and Adani Group:
While GQG Partners initially realized an unrealized profit of Rs 11,474 crore ($1.56 billion) in May, representing a substantial gain of 74% from its buying price in March, this profit dropped to Rs 7,014 crore ($954 million) on June 23, indicating a 30% decrease in notional profit within a month. The decline in profits has been attributed to the ongoing investigations and the subsequent negative market sentiment surrounding the Adani Group.
Furthermore, the Adani Group’s market capitalization experienced a significant decline of Rs 55,000 crore ($7.5 billion) on the day of the probe report, marking the largest single-day drop in four months. Adani Enterprises, the conglomerate’s flagship arm, witnessed its shares falling by as much as 10%, making it the worst-performing stock on the Nifty50 index. The decline in market capitalization and stock prices reflects the concerns and uncertainties surrounding the investigations, impacting investor sentiment.
The US-based boutique investment firm GQG Partners has incurred substantial notional losses on its Adani Group investments amid reports of a US probe into the conglomerate. The investigations were triggered by allegations of financial misconduct made by Hindenburg Research. As a result, both GQG Partners and the Adani Group have experienced significant financial implications, with GQG Partners witnessing a drawdown in profits and the Adani Group suffering a significant decline in market capitalization. These developments highlight the importance of comprehensive and accurate disclosures by companies to maintain investor trust and confidence in the financial markets.
