GQG doubles down on Adani amid $265 million bribery allegations, says fundamentals are strong

The $265 million bribery scandal in the U.S. isn’t shaking GQG Partners’ confidence in billionaire Gautam Adani’s sprawling empire. On Monday, Rajiv Jain’s GQG Partners reaffirmed its faith in the Adani Group, stating there’s no shift in its investment strategy despite the allegations.

Before the scandal surfaced, GQG held a $9.7 billion stake in Adani Group companies, accounting for 6.1% of the investment firm’s total assets. “We believe this level of exposure is manageable, even given the volatility in Adani Group stocks,” GQG noted in a memo, emphasizing its belief in the sound fundamentals of its investments.

The scandal centers on Adani Green Energy, but GQG was quick to clarify the charges target individuals, not the company or its broader operations. “The DOJ indictment and SEC action are against individuals only. The allegations relate solely to AGEL, not other Adani companies,” the memo stated.

Adani Group stocks initially nosedived following the indictment, shedding approximately ₹2.45 lakh crore in market value over three days. However, selling pressure eased in subsequent trading sessions.

GQG, which started investing in Adani stocks during the Hindenburg crisis in March 2023, has spread its investments across seven Adani companies, including Adani Enterprises, Adani Ports, and Adani Green Energy. The firm underscored that these are independently managed businesses with distinct clients and revenue streams.

“Since initiating our positions, we have seen strong fundamental growth in these businesses, resulting in meaningful earnings growth,” GQG said, adding that its Adani portfolio has delivered positive returns in aggregate as of November 21.

The scandal might limit Adani’s access to foreign capital if additional financing is required, but GQG pointed out that India’s domestic banks, including government-owned ones, show no signs of restricting credit to the conglomerate.

In contrast, French energy giant TotalEnergies announced a pause on fresh investments in Adani-linked projects until the allegations are resolved. “Until such time when the accusations and their consequences are clarified, TotalEnergies will not make any new financial contribution,” the company stated.