GQG Partners invests $1 billion to buy additional stake in AEL, AGEL

Firm had invested $ 2.3 bn in group cos in March; flagship AEL gains over 5%, AGEL ends flat

American financial powerhouse GQG Partners (GQG), along with other investors, acquired shares worth $1 billion (Rs. 8,200 crore) from Adani family in the group’s flagship Adani Enterprises Limited (AEL) and Adani Green Energy Limited (AGEL) via block deals on Wednesday.

About 48 million shares, or 3 per cent of the total equity of AGEL, and a 1.6 per cent stake, or 18 million shares, in AEL, were sold via block deals to GQG on Wednesday, informed bankers.

Following the transactions, the shares of AGEL closed flat at Rs. 958 per share, while AEL’s shares closed 5.34 per cent up at Rs. 2,404 per share.

On March 2, GQG first invested $1.9 billion (Rs. 15,446 crore) in Adani Ports and Special Economic Zone (APSEZ), AGEL, Adani Transmission Limited (ATL), and AEL.

The same month, it topped its investment by buying additional stake in group companies worth $400 million (Rs. 3,800 crore) from the market.

GQG made these investments after US-based short-seller Hindenburg Research accused Adani Group of market manipulation on January 24. The group denied the allegations and took several steps, including prepaying debt, to revive investor sentiment.

Besides, GQG’s investment in March led to a revival in Adani Group shares. With Wednesday’s investment, GQG’s total investment in AEL and AGEL rises to Rs. 23,200 crore. The proceeds will be used by promoters to prepay debt, said banking sources.

Banking sources said GQG sees value in Adani companies as these companies have emerged as the largest and fastest-growing critical infrastructure developers in the private sector.

“Adani portfolio companies offer a one-stop play for India’s growing infrastructure theme with no equivalent alternative,” said a banker.

At present, AEL is developing new businesses such as airports, roads (transport and logistics), data centres, copper, and green hydrogen, which could lead to substantial value unlocking over the next five to 15 years for its investors, said a banker.

“AEL has already incubated unicorns such as ATL, Adani Power, and APSEZ. The combined market capitalisation of these four companies alone stands at $62 billion, which is almost twice that of the incubator. The management in the recent past has said it would be separately listing airports and road businesses in the next three to four years,” said a banker.

The performance of AEL in 2022-23 (FY23) also lifted investor confidence. AEL’s total income increased by 96 per cent to Rs. 1.38 trillion in FY23 on account of strong performance by its airports and integrated resource management businesses.

The earnings before interest, tax, depreciation, and amortisation increased by 112 per cent to Rs. 10,025 crore on the back of growth in new businesses.

On the other hand, AGEL has emerged the largest and fastest-growing renewable energy player in India. Its green capacities have grown at a 33 per cent compound annual growth rate over the past five years, outpacing the industry average of 15 per cent.

Currently, the size of its renewable energy portfolio stands at 20.4 gigawatt (Gw): 8.2 Gw operational and another 12.2 Gw under-construction and near-construction projects. The company is targeting a 45-Gw portfolio by 2030.

After the Hindenburg report, the promoters decided to pare debt, both at the promoter and company levels, and also go slow on acquisitions.

The listed companies are also reducing debt and have set aside several acquisitions to conserve cash.