US-based GQG sees Rs 4,400-cr notional drop in profit on Adani investments amid report of US probe on Adani Group

US-based boutique investment firm GQG Partners on Friday saw profit drawdown to the tune of nearly Rs 4,500 cr in its Adani investments as a report said US authorities are investigating the representations made by the Adani Group to its American investors. The representations were necessitated in the wake of a scathing report against the conglomerate by US short seller Hindenburg Research.

Following a Bloomberg report of US probe into Adani Group, the shares of the conglomerate's listed firms saw up to 10% fall with flagship arm Adani Enterprises' shares falling as low as 10%.

Adani Enterprises, which closed Friday trading session nearly 7% lower, was also the worst-performing stock on the Nifty50 index.  Adani Group's market capitalisation on Friday fell as much as Rs 55,000 crore, its biggest single-day drop in m-cap in four months

In March, Rajiv Jain-led GQG partners purchased shares in four Adani Group companies worth $1.87 billion.

GQG Partners had bought 38,701,168 Adani Enterprises shares at Rs 1,410.86 apiece for Rs 5,460 crore. In May, the share price of Adani Enterprises made a high of Rs 2,759.5 after the committee appointed by the Supreme Court of India said that it didn’t find any regulatory failure on the part of SEBI in relation to Adani Group of companies.

Following the investigation findings of the six-member expert committee, value of GQG Partners’ investment in Adani enterprises went upto Rs 10,679 crore. As of Friday, June 23, the value of the holding has fallen to Rs 8,644 crore, which represents a notional loss of Rs 2,035 crore on its profit it gained since May 2023.

The US-based boutique investment firm bought 88,600,000 Adani Ports shares at Rs 596.20 apiece for Rs 5,282 crore. The investment value had climbed to Rs 6,959 crore before falling to Rs 6,328 crore, a decline in value of the holding by Rs 631 crore.

GQG Partners also bought 55,600,000 shares of Adani Green Energy at Rs 504.60 valued at Rs 2,806 crore in March. Those shares were worth Rs 5,976 crore in May. However, on Friday, the holding value fell to Rs 5,336 crore, thus reducing the value of the holding by Rs 639 crore.

In Adani Transmission, GQG bought 28,400,000 shares at Rs 668.40, totalling Rs 1,898 crore. The shares were worth Rs 3,304 but fell to Rs 2,151 crore by Friday. This led to a decline of Rs 1,152 crore in the holding value of GQG partners.

Rajiv Jain recently said GQG will be interested in further investing in Adani Group. In May, two Adani firms, Adani Enterprises and Adani Transmission, together announced raising up to Rs 21,000 crore together.

Even though, GQG Partners, in May, made an unrealised profit of Rs 11,474 crore, a whopping gain of 74 per cent from its buying price in March. However, on Friday it saw the profit fall to Rs 7,014 crore, which represents 30 per cent fall from its notional profit a month ago.

The inquiries by US authorities come at a time when Indian Prime Minister Narendra Modi is on a state visit to US.

On Friday, Adani Group's market capitalisation fell as much as Rs 55,000 crore, its biggest single-day drop in m-cap in four months.

A spokesperson for the Adani Group stated that they were not aware of any subpoenas issued to investors. The group denied the accusations made by the short seller and maintained that their disclosures were comprehensive and accurate.

The troubles for the Adani Group began when Hindenburg Research released a report on January 24, accusing the conglomerate of using offshore companies in tax havens to manipulate share prices and financial results, which the conglomerate vehemently denied.

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