Shares of GQG Partners, a significant investor in the Adani Group, plunged 15.74% on Monday following a downgrade by Swiss banking giant UBS. The downgrade shifted GQG’s rating from “buy” to “neutral” and slashed the stock’s target price from AU$3.30 to AU$2.30. By midday trading in Sydney, GQG’s shares had fallen to AU$2.08, underscoring investor concerns about the firm’s exposure to the embattled Adani Group.
This marks the first time UBS has downgraded GQG since initiating coverage of the stock in 2022. The Australia-listed investment firm is the fourth-largest shareholder in Adani Enterprises, the flagship company of the Adani Group.
The sharp decline follows recent turbulence for GQG, including a record intraday low of AU$1.96 on November 21. That drop came in the wake of fraud charges against Adani Group Chair Gautam Adani in New York. The news triggered GQG’s steepest single-day decline since its listing, with shares losing 25% of their value.
In a statement to CNBC on November 21, GQG emphasized its commitment to monitoring the Adani situation. The firm stated it was “reviewing the emerging details and determining what, if any, actions for our portfolios are appropriate.” GQG also sought to reassure stakeholders by highlighting the diversity of its investments, noting that more than 90% of its client assets are invested in issuers unrelated to the Adani Group.
Despite the recent volatility, GQG has previously reaped significant returns from its Adani investments. The firm capitalized on a market downturn in January 2023, when Adani shares tumbled following allegations of fraud by short-seller Hindenburg Research. At the time, GQG Chair Rajiv Jain reported approximately $4 billion in profits from Adani-related investments. However, Jain indicated earlier this year that the firm was unlikely to make additional investments in the group.
While GQG faces mounting challenges, Adani shares have shown signs of resilience. Adani Green Energy, one of the companies at the center of the U.S. indictment, surged by 22% on Friday. In his first public remarks since the charges, Gautam Adani reaffirmed the group’s commitment to “world-class regulatory compliance” as it navigates the ongoing legal process.
The UBS downgrade reflects heightened concerns over GQG’s exposure to the Adani Group amid its legal troubles. While GQG has sought to mitigate these risks by emphasizing its diversified portfolio, the firm’s association with Adani underscores the challenges of balancing high-risk investments with broader market stability.
As GQG navigates this turbulent period, investors and analysts will closely watch the firm’s next moves and its ability to manage the fallout from the Adani crisis.
