Indian money managers continue to trim holdings of Adani Group's stocks

By Chiranjivi Chakraborty and Ashutosh Joshi

Money managers in India have continued to trim holdings of Adani Group’s stocks, suggesting concerns about governance remain even as the worst of the rout seems to have passed.  
 

Investments by local equity mutual funds in the group accounted for only 0.9% of the industry’s $182 billion in assets at the end of March, according to data compiled by Bloomberg. That’s down from nearly 2% as of Dec. 31.

The embattled conglomerate at one point saw $153 billion erased from its market value in the selloff following the release of Hindenburg Research’s scathing report on Jan. 24. The group has vehemently denied allegations made by the short-seller, and has since trimmed down capital spending for growth and said that its founders have paid back share-backed loans.

Local managers’ continued caution is at odds with the optimism shown by GQG Partners’ star investor Rajiv Jain, who spent nearly $2 billion to scoop up stakes in four Adani stocks in early March. The move acted as a catalyst for a rebound of more than $30 billion in the group’s market value.

While Indian funds’ overall exposure has dropped, some players such as Mirae Asset Investment Managers Pvt. and HSBC Asset Management India Pvt. were buyers in March. However, shares purchased by them in two group entities totaled less than 700,000, according to data from Nuvama Wealth Management Ltd.

A historical analysis by Bloomberg Intelligence in 2021 showed that local fund managers have had smaller holdings in companies that reported governance issues than overseas and individual investors.