Goldman Sachs slashes Adani Group stakes from its ESG funds: Report
9 min read 17 May 2023, 05:08 PM ISTIn the weeks following allegations of fraud against the company by short-seller Hindenburg Research, the investment division of Goldman Sachs Group Inc. significantly cut its exposure to the Adani Group in its ESG portfolios.
PremiumThe investment division of Goldman Sachs Group Inc. drastically decreased its exposure to the Adani Group in its ESG portfolios in the weeks following allegations of fraud made against the company by short-seller Hindenburg Research, reported Bloomberg.
According to data collated by Bloomberg, Goldman funds designated by the European Union as pursuing environmental, social, and governance goals sold 11.7 million shares in Adani firms in February. According to the statistics, Goldman Sachs Asset Management's actively managed ESG fund exposure to Adani was only ever a stake in Ambuja Cements Ltd. totaling about 400,000 shares after the retreat.
Northern Trust Corp and Storebrand ASA are two other asset managers who have removed Adani from ESG funds, according to Bloomberg data, which excludes exchange-traded funds and is based on an examination of the most recent filings. Overall, 12 million shares of the conglomerate's Adani Group were sold by 13 actively managed ESG funds, with Goldman accounting for the majority of the sales according to Bloomberg data.
A spokesperson for Goldman Sachs declined to comment. Spokespeople for Northern Trust and Storebrand didn’t immediately respond to requests for comment, reported Bloomberg.
After Hindenburg Research issued its research on Jan. 24 saying the conglomerate was guilty of market manipulation and fraud, Adani companies are currently attempting to tap markets, which would represent a key milestone for the company. After the publication of the Hindenburg report, Adani's empire's market value decreased by more than $100 billion. Since then, Adani has repeatedly denied the short seller's allegations and is now working to mend its ties with financial institutions.
Adani Enterprises Ltd. and Adani Transmission Ltd. will seek to raise as much as $2.6 billion in total, according to separate filings on May 13. The companies still need shareholder approval for the transaction.
“Goldman Sachs cutting Adani group stakes from ESG funds and Adani Group companies now seeking to raise capital are two entirely separate events," a spokesperson for Adani said by email. “The former is related to the market sale of equity shares in the secondary market, where the group or group companies have no role to play. On the other hand, the latter is related to enabling provisions for the primary issue for capital raising by the two group entities, Adani Enterprises Ltd and Adani Transmission Ltd. We do not foresee any change or impact of the former on our fund-raising plans, as the two events are completely unrelated."
According to Bloomberg data, the total number of ESG funds, including ETFs, with direct holdings in Adani companies decreased to 59 from 90 at the start of February. The amount of ESG funds exposed to Adani, including indirect ownership, remains roughly steady at just over 500.
After GQG Partners purchased shares in four of the group's enterprises for a total of $1.9 billion in March, Adani received support from a significant investor. Additionally, after Hindenburg's analysis was published, certain ESG-registered funds—a total of eight were found by Bloomberg data—have increased their exposure to Adani.
Adani enterprises have been removed from a number of important indexes and rankings ever since the fraud charges were made public in late January. At the end of this month, Adani Transmission, whose stock price has fallen by about 70% this year, will be removed from MSCI Inc.'s India index. Along with Adani Green and Adani Total Gas Ltd., the company will also be removed from a local list of businesses designated for so-called enhanced surveillance measures, according to a list posted earlier this month on the websites of the two largest exchanges in the nation.
According to Bloomberg media report, a United Nations-backed organization created to help companies establish credible net zero targets, the Science Based Targets initiative, has removed three Adani companies from a list monitored by green investors. The decision means that Adani Green, Adani Transmission and Adani Ports & Special Economic Zone Ltd. are no longer listed as “companies taking action" to reduce their emissions in line with the goals of the Paris climate accord.
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