After the US District Court and SEC indicted Adani Group Chairman Gautam Adani, his nephew Sagar Adani and six others in a $265 million bribery case, GQG Partners issued a statement maintaining confidence in the group companies’ fundamentals. “As the facts currently stand on 21 November, we do not see these actions as having a material impact on these businesses. These businesses operate critical infrastructure regulated by the Indian government,” it said, while maintaining that there will be no changes in its investment outlook at present.
GQG Partners said that the indictment is of the employees and not the company. The company said regulatory investigations often take years to conclude and may result in reduced penalties. It further added that in the interim, the companies continue to operate, looking to improve their business practices and moving their businesses forward. There are precedents of global corporations and executives facing corruption charges, GQG said. “We feel the Indian government will maintain its support for Gautam Adani as he is the most important infrastructure developer in the country by order of magnitude,” it added.
“We think it is unlikely that Indian regulators will take action in this matter given the thorough review of Adani Group following the Hindenburg allegations. However, we will be monitoring any developments closely,” the firm stated.
GQG Partners acquired a stake in the Adani Group following last year’s Hindenburg controversy. As of November 21, GQG’s total exposure stood at $8.1 billion on total assets of $156.7 billion, or 5.2 per cent of total assets. In March 2023, GQG initiated positions in five of the publicly traded members of Adani Group, including Adani Enterprises, Adani Ports and Special Economic Zone, Adani Green Energy (AGEL), Adani Energy Solutions, and Ambuja Cements. GQG subsequently added exposure to Adani Power and Adani Total Gas.
“These companies manage critical infrastructure for one of the world’s fastest growing economies. On a fundamental business case, we continue to believe each individual company is well-positioned for the future. Our investments in Adani as of 21 November have had positive returns in aggregate for our portfolio,” GQG Partners said
Earlier on 21 November, in a filing on Australian Stock Exchange, GQG Partners had said that it was monitoring the charges brought about by the US Attorney’s Office for the Eastern District of New York and the US Securities and Exchange Commission against Gautam Adani and certain other Adani Group executives and companies. “Our team is reviewing the emerging details and determining what, if any, actions for our portfolios are appropriate,” it had said.