The logo of the Adani Group is seen on the facade of its Corporate House on the outskirts of Ahmedabad
The logo of the Adani Group is seen on the facade of its Corporate House on the outskirts of Ahmedabad, India, January 27, 2023. Reuters

U.S. boutique investment firm GQG Partners has bought shares worth $1.87 billion in four Adani group companies, marking the first major investment in the Indian conglomerate since a short-seller's critical report sparked a stock rout.

Seven listed Adani companies have lost some $135 billion in market value since Jan. 24, when Hindenburg Research accused it of improper use of offshore tax havens and stock manipulation --allegations the billionaire Gautam Adani-led group has denied but which led it to call off a $2.5 billion share sale.

The investment also comes on a day when India's top court asked market regulator SEBI to investigate the group for any lapses related to public shareholding norms or regulatory disclosures.

The group has been trying reassure investors with road shows and calls with bond holders. According to sources, Adani has told creditors it has secured a $3 billion loan from a sovereign wealth fund.

U.S-based, Australia-listed GQG has, through block deals, bought shares worth 154.46 billion rupees in four Adani group companies, including the conglomerate's flagship firm Adani Enterprises, a regulatory filing showed.

"We believe that the long-term growth prospects for these companies are substantial," said Rajiv Jain, GQC's chairman and chief investment officer. Before founding GQG, Jain spent 22 years at Vontobel Asset Management.

GQG took a 3.4% stake in Adani Enterprises for about $662 million, 4.1% in Adani Ports for $640 million, 2.5% in Adani Transmission for $230 million, and a 3.5% stake in Adani Green Energy for $340 million.

Based in Fort Lauderdale, Miami, GQG manages $88 billion in assets, in global, U.S. and emerging markets equities funds.

"This transaction marks the continued confidence of global investors in the governance, management practices and the growth of Adani Portfolio of companies," said Adani Group CFO Jugeshinder Singh.

In the run-up to the announcement, Adani group shares rallied, with Adani Enterprises climbing nearly 35% over the last three sessions, Adani Ports 11% and Adani Green Energy 16%. Adani Transmission rose 10% in the previous two sessions.

"For the short-term, this will definitely be a big positive for the sentiment for Adani stocks...," said Avinash Gorakshakar, head of research at Profitmart Securities.

"But in the longer term, the market is going to look at how growth is going to come."

Jefferies India was the sole broker for GQC's transaction. ($1 = 82.5180 Indian rupees)