Assets hold the key. GQG sees $2-billion Adani bet delivering returns of over 100 per cent

Rajiv Jain, one of the biggest names in emerging-market investing, cut across the grain last month when he bought almost $2 billion worth of Adani Group stock. 

Now, the chief investment officer of GQG Partners Inc. has grand predictions for his bet on the embattled Indian conglomerate: a return in excess of 100 per cent.

“These could be multibaggers” over five years, Jain said in an interview at Bloomberg’s New York headquarters. The term comes from mutual fund manager Peter Lynch’s book and describes an investment that could at least double.

Also read: After ₹15,500-crore bet, Rajiv Jain says Adani Group is ‘irreplaceable’

The Florida-based firm has become the highest-profile champion of billionaire Gautam Adani’s battered empire. The Adani Group lost as much as $153 billion in market value after a US short-seller accused the conglomerate of stock-price manipulation and fraud in a report released earlier this year.

But those allegations, which the Adani Group denies, haven’t deterred Jain. The veteran investor, who’s of Indian origin but works from Fort Lauderdale, has often pushed back against what he calls “comfort investing” — making decisions by committee rather than taking risks on undervalued public shares.

Jain said the Adani Group’s value lies in its assets. Prime Minister Narendra Modi’s government is looking at tycoons like Adani — at one point Asia’s richest man — to improve the nation’s infrastructure and lure manufacturing from places like China. Many of the Adani Group’s projects are tethered to India’s development goals, and cut across multiple sectors of the economy.

In particular, Jain pointed to Adani’s coal mining assets, his data centres and majority stake in Mumbai’s busy international airport as signs of a healthy business. 

“We believe the airport itself could be worth more than the company,” Jain told Bloomberg, noting that the land alone stretches across some of Asia’s most expensive urban real estate.

GQG Partners portfolio

GQG Partners has a diverse portfolio. The firm oversees more than $90 billion, with investments in industries like oil, tobacco and banking. Jain said he wasn’t fazed after a January 24 report from Hindenburg Research detailed fraud across the Adani Group — accusing the conglomerate of “pulling the largest con in corporate history.” In March, GQG acquired shares in four of Adani’s firms from a family trust.

The Hindenburg report read like a “10-year-old newspaper,” Jain said. Over a 30-year investment career, “I’ve yet to come across a perfect company,” he said.

One of Hindenburg’s allegations is that by using a labyrinth of offshore accounts connected to the family, the group skirted Securities and Exchange Board of India requirements that public shareholders own at least 25 per cent of a stock. Adani has denied the claims. 

“One of the issues raised was that he owns more than 75 per cent of the company, right? And let me ask you in real simple English, is that fraud?” Jain said. “Is it not disclosed properly? Yeah, it’s some of that, you could argue that, but is it fraud?”

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