For five long years, Rajiv Jain kept tracking the stocks, but the Adanis remained out of bounds because their valuations stayed in "no man's territory" till his GQG Partners spent Rs 15,446 crore for a slice of the pie.
And, now GQG Partners wants to expand its investment in the Adani group, the founder Jain said on Wednesday.
"Chances are we'll probably buy more because we typically initiate a position and then depending on how things go and how the earnings come through we tend to get it to full size because we're not at full size at this point," he said.
Adanis have fantastic assets "at an attractive price", Jain had told Australian Financial Review after multiple block deals with the Adani Group.
GQG Partners picked up stake in Adani Ports and Special Economic Zone Limited, Adani Green Energy Limited, Adani Transmission Limited and the flagship Adani Enterprises Limited, in a series of secondary block trade transactions.
Jain, based in Florida, flew to Australia this week for talks with investors, which include some of Australia's largest pension funds. Last week, pension fund investor Cbus Super, with A$71 billion ($46.82 billion) under management, said they had queried GQG about the Adani purchase.
Fantastic assets
His biggest bet is on the conglomerate's assets. “About 25 percent of India’s air traffic passes through their (Adani) airports and 25 to 40 percent of India’s cargo volume goes through their ports,” he told AFR.
“Adani Green Energy is by far the fastest and the largest private sector green energy company in India. They’re rolling out almost 3 gigawatts annually. So, I think some of their assets are fantastic.”
Also Read: Meet GQG Partners, a global investor that bets $1.87 billion on beleaguered Adani Group
On Hindenburg Report
A January 24 report by US short-seller Hindenburg Research accused the ports-to-power conglomerate of stocks manipulation and accounting fraud, setting off a bloodbath in the Adani stocks. The group has lost over Rs 11 lakh crore in market capitalisation in the last six weeks.
Since then, Adani Ports TTM price-to-earnings ratio has fallen from 34x to 29.5x, while Adani Enterprises P/E declined to 245.8x from 487.5x.
“They have their view, and we have ours, and we happen to disagree with their view, but that’s what makes a market,” Jain told AFR. “A lot of governments have come and gone in that period. Frauds typically don’t last 30 years – three months, three years, maybe, but not 30 years."
Speaking to CNBC-TV18, he elaborated that some of the allegations made by Hindenburg make no sense as almost every Indian company has over 'hundreds of open court cases'.
RIL, ITC and other Indian holdings
GQG Partners has picked up stake in the Adani companies in two funds: Emerging Markets Equity Fund and International Opportunities Fund.
As of December end, Emerging Markets Equity Fund had ITC (6.5 percent of total portfolio), Housing Development Finance Corporation (5.1 percent), Reliance Industries (4.2 percent), ICICI Bank (2.9 percent) and State Bank of India (2.8 percent) in its top 10 holdings.
Indian companies make for 34 percent of the GQG emerging markets fund.
The International Opportunities Fund, which is run in partnership with Goldman Sachs, has only one Indian company in its top 10 holdings - HDFC. It has 7.8 percent exposure to Indian companies.
According to Bloomberg, one can find lots of industries with a 'decidedly 20th-century feel' in Jain's portfolio, like oil, tobacco, banking. In 2022, when most funds crashed, three of GQG's four flagship funds beat benchmark indices by wide margins.
With inputs from Reuters
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