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GQG Partners, known for its contrarian bet against Adani group companies during the Hindenburg crisis, is looking to expand into more similar investments in India, with a growing number of Indian promoters looking for “confidence capital”. said a fund executive.
Sudarshan Murthy, senior portfolio manager at the firm, said: “Given the assets we manage and the media headlines we’ve received over the past 18 months or so, it’s only natural to receive inbound inquiries, which is positive. It’s a great development,” he said. said in an interview. “But we’ve been receiving inbound queries for some time now, and the volume has probably increased slightly,” he said.
GQG has invested in India several times in the past, but the decision to invest in Adani Group was a turning point. As Adani’s share price began to recover, the value of GQG’s investment nearly doubled in a short period of time.
For example, GQG bought Adani Enterprises shares worth Rs 3.43 billion in March 2023 at Rs 1,408.25 per share. On Monday, Adani Enterprises shares closed at Rs 3,327.55, with GQG’s holdings more than doubling to Rs 8,017.50 crore in less than a year.
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Similarly, GQG’s purchase of Rs 4,244.70 crore stake in Adani Transmission for Rs 279.15 crore in August has doubled to Rs 8,636.20 crore in less than a year.
But concerns remain about the fund’s exit strategy, given its large holdings in companies with limited interest from institutional investors. The head of a prominent domestic stock fund said, “The increase in value is nominal, and any attempt to sell even a small amount of shares could cause the stock prices of some of the companies in which GQG has invested to plummet.” However, he refused. Being given a name.
Nevertheless, many remain optimistic about GQG’s prospects, citing the evolving liquidity landscape in the Indian market, suggesting that GQG’s investment could ultimately attract more investors and a favorable valuation. This will pave the way for an exit. “We’re taking a long-term view,” Murthy said.
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“In the case of Adani, short seller reports led to big price movements. And as I worked more and more, I felt these were great, world-class assets under management. They had strong GQG-like characteristics. “It’s a business that has.” In some cases, it could be visible for the next 20 years,” he said.
Also read: GQG Partners’ Rajiv Jain is bullish on PSU stocks, regrets not buying LIC in 2023
No pressure from investors
GQG’s client base is made up of institutional investors such as endowments, pension funds and corporations, but Murthy believes that despite being operated as a public market fund, GQG’s private equity-like bottom Up’s fundamental approach suits investors well and claims there is no pressure on investors. Please return the capital on time.
“That’s the first question we need to be comfortable with. So it’s very important for us to be confident that this business is still in good shape five years from now,” Murthy said, adding: “Once you have that confidence, what will happen to this business?” he added. The business will be like he is five years from now. And we try to understand the revenue growth over the next five years. And more importantly, we try to understand its earnings growth over five years. “How many years it takes determines the final exit in five years. And when you discount all those cash flows, you know whether the opportunity is attractive or not.”
More contrarian bets
Since its investment in Adani, GQG has acquired significant stakes in several Indian companies including JSW Energy and IDFC First Bank. It has also invested in Patanjali Ayurveda and GMR Airports, both of which are notable for holding large stakes as promoters, similar to Adani group companies. But Murthy insists this strategy is what sets his GQG apart.
“Our job is to keep looking under every rock we can find, and after a few tries, we might find something interesting somewhere someday,” he said.
Murthy maintains that Patanjali Ayurveda, founded by Ramdev, has a strong brand image and a solid growth trajectory.
“Patanjali has demonstrated consistent revenue growth with a focus on brand building and advertising, making it an attractive investment opportunity for GQG Partners.Patanjali has a strong brand image and strong roots in Indian traditional medicine. “The FMCG business is doing pretty well. They’re doing the right things, like building their brand and investing in advertising,” Murthy said. “This is a business with very attractively valued growth prospects and could demonstrate stable earnings growth of around 20% over the long term.”
Similarly, GMR Airports Ltd, which owns and operates major airports in India including Delhi and Hyderabad, attracted GQG’s interest in December when it acquired about 4 per cent stake for Rs 1,672 crore. “They own the country’s largest airport in Delhi and the fourth largest airport in Hyderabad. And over time, post-COVID, passenger traffic will return. , which we feel will contribute to revenue and profit. Importantly, we are monetizing well in non-aviation businesses such as retail, food and beverage, and duty-free. We are also focused on real estate development.” said Mr.
“We tend to like the airport business. There are strong network effects and once you own an airport, it’s very difficult to get rid of it,” he said.
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