Companies
After GQG, Abu Dhabi's IHC backs Adani over US indictment
Summary
- International Holding Company, which is listed on the Abu Dhabi Securities Exchange, is the third-largest foreign investor in Adani, having put in $2.5 billion.
Mumbai: International Holding Company (IHC), the investment arm of Abu Dhabi's ruling family, emerged as the second major investor to affirm its faith in the Adani group after US federal prosecutors indicted Gautam Adani and others for allegedly bribing Indian government officials.
"At IHC, our investment strategy is guided by a commitment to long-term growth and sustainability. We understand that matters involving individuals are distinct from the operations and potential of the businesses they represent," an IHC spokesperson said in an emailed response to Mint.
IHC, which is listed on the Abu Dhabi Securities Exchange, is the third-largest foreign investor in Adani, having put in $2.5 billion. Other large investors include French energy major TotalEnergies ($3.85 billion) and American investor GQG Partners ($3 billion).
Last week, US-based GQG Partners backed the Ahmedabad-based ports to renewable energy conglomerate in a note to its investors. The current value of the firm's investments across seven listed Adani companies is more than $8 billion.
Also read | Mint Explainer: What is the US indictment of Gautam Adani all about?
The IHC spokesperson said, "Our partnership with the Adani Group reflects our confidence in their contributions to the green energy and sustainability sectors." While it continues to evaluate new information and developments, its outlook on the Adani group is unchanged, the spokesperson added.
The Adani group has denied all the charges by the US prosecutors and said it would seek legal remedies.
“All of this is based on likelihoods and hearsay from former employees of Azure Power and CDPQ places the US DoJ’s and US SEC’s action against Adani on dangerously shaky ground – both morally and legally," the Adani group said in a press statement Wednesday.
The 11 listed Adani group companies had lost a combined $55 billion in market capitalisation as of Wednesday following the public intimation of the charges last week, the conglomerate said in a press statement.
US charges
Last week Gautam Adani, his nephew and Adani Green Energy executive director Sagar Adani, and Adani Green Energy managing director Vneet Jaain were charged by the US Department of Justice and the US Securities and Exchange Commission for alleged bribery.
Prosecutors alleged the executives paid several Indian government officials a combined ₹2,029 crore in bribes for favourable power supply agreements, and charged them with three counts of alleged securities and wire fraud. Two former executives of Azure Power and three former executives of Canadian investor Caisse de dépôt et placement du Québec (CDPQ) were also implicated by the American prosecutors.
Also read | Adani indictment: FCPA cases take long to conclude
Adani bulls cut positions before indictment
On Monday, Mint reported that two days before the US indictment, bulls on two of the group companies' derivatives counters slashed their long positions, saving them from massive losses that hit the group shares after the news broke.
Certain traders holding futures positions in Adani Enterprises and Adani Ports squared off or closed out a substantial part of these on 19 November, two days ahead of the carnage. Wednesday (20 November) was a holiday for assembly elections in Maharashtra.
On Adani Enterprises' active futures contract, traders squared off 16.27 lakh shares on 19 November, reducing outstanding positions—open interest (OI)—by 8% to 1.78 crore shares with the contract price closing down 0.25% to ₹2,819.55 a share, National Stock Exchange (NSE) data showed.
On Thursday, after news of the indictment broke, the contract, which takes cues from the spot price, tanked 23% to ₹2,178.55. The crash was driven by bulls further liquidating their outstanding positive positions by 2.29 million shares or 13% to 15.5 million shares.
