Veteran fund manager Rajiv Jain said his GQG Partners LLC holds about $13 billion in India stocks and plans to buy more, downplaying corporate governance and political risks associated with his headline-generating investments in billionaire Gautam Adani’s beleaguered conglomerate.

GQG holds positions in companies including ITC Ltd., Sun Pharmaceutical Industries Ltd., along with lenders ranging from the State Bank of India, ICICI Bank Ltd. and Housing Development Finance Corp. 

“We like private sector banks, IT and consumer staples,” Jain, GQG’s chief investment officer, said in an interview. “But we feel infrastructure is the new story and still under appreciated.”

‘Contrarian bets’

As GQG looks to increase its holdings across the South Asian nation, it has spent about $2.5 billion in five Adani Group stocks since March after the tycoon’s ports-to-power empire was broadsided by short-seller Hindenburg Research. 

Jain said he has “always taken contrarian bets,” for example cutting exposure to technology in 2021 and adding energy. “At our seventh anniversary, we are touching $100 billion assets under management,” he added.

Jain went further than in previous interviews to outline misunderstandings over Adani’s political links, adding that his companies are essential to India’s efforts to build up and revamp its countrywide infrastructure.

“There is lot less political risk in the Adani story than perceived,” Jain said, referring to the view that the tycoon’s business success is linked to, or depends on, Prime Minister Narendra Modi being in power. “A lot of competition they have is with less dynamic public sector companies which reduces political risk in our opinion.”

After Hindenburg in January accused Adani Group of “brazen” fraud — causing it at one point to shed more than $150 billion in market value — the tycoon’s backstory and ties with Indian politicians have come under fresh scrutiny. Adani is perceived to share a tight-knit friendship with Modi. Both hail from Gujarat — the state Modi previously governed as chief minister. 

As the conglomerate has seen explosive growth since Modi came into power, some argue that its momentum may falter should the ruling party be voted out. National elections are due to be held next year and Modi, the country’s most powerful and popular leader in decades, is expected to secure a third term. 

Adani has previously said he doesn’t receive or expect special treatment from the government. Modi hasn’t spoken directly on the issue.

Jain pointed to opposition held states, such as Rajasthan where Adani has made large investments, as evidence that the conglomerate is unlikely to be impacted by a change in India’s political winds. The Indian-origin fund manager who works from Fort Lauderdale in Florida, also brushed off corporate governance concerns after Deloitte Haskins & Sells LLP flagged insufficient disclosures this week over Adani Ports & Special Economic Zone Ltd.’s transactions with certain entities.

‘Hue and Cry’

“People are making hue and cry flagging corporate governance issues with Adani Group without acknowledging overall results,” said Jain, who has repeatedly pointed to the quality of Adani assets from coal mines to airports, as well as the conglomerate’s ability to execute projects. He also compared the situation to investing in China. 

“Let’s talk about someone investing in Chinese companies under the VIE structure,” he said, referring to variable interest entities, which have been criticized for their lack of transparency and that Jain argued masks ownership. “It’s never a perfect setup in investing.”

Market momentum appears to be in Jain’s favor for now as Adani Group stocks have rallied and an interim expert panel report submitted to the Supreme Court last month found no conclusive evidence of stock-price manipulation by the conglomerate.

GQG currently values its Adani-related holdings at about $3.5 billion after a recovery in share prices from post-Hindenburg lows. Two Adani firms announced plans last month for a $2.6 billion share sale.

“We are certainly interested in investing further in Adani,” Jain reiterated. “But it depends on a lot of things, including pricing. Nothing is written on stone.”