Despite facing significant losses after the Hindenburg Research report alleged irregularities in Adani Group’s operations, some major international asset managers increased their holdings in the conglomerate’s dollar bonds over the past year. US-based firms BlackRock and Neuberger Berman, alongside European firms Lombard Odier and Jupiter Fund Management, added to their existing positions in Adani Group’s dollar debt securities after prices plunged in early 2023.
Data compiled by Bloomberg shows that BlackRock, one of the world’s largest asset managers, doubled its holdings of Adani dollar bonds to $125 million based on par value. Similarly, State Street Corp’s holdings rose over 50% to $16 million during this period. Neuberger Berman’s position grew by around 42% to just over $40 million. Lombard Odier also raised its exposure by 20% to nearly $140 million.
These purchases indicate the change in fortunes for the infrastructure conglomerate led by billionaire Gautam Adani. After the sharp correction following the Hindenburg report’s claims of fraud and opacity in January 2023, the company took various steps to shore up confidence. It repaid debt significantly, refinanced existing loans on better terms, and raised $5 billion in fresh equity capital from marquee investors like TotalEnergies and Abu Dhabi government entities.
Subsequently, Adani Group‘s operating performance held steady with its core verticals like ports, power generation and transmission reporting healthy financial numbers. This reinforced the quality and resilience of its underlying assets. Moreover, the conglomerate made conscious efforts to reduce debt levels and bring more balance sheet transparency over the past year.
As per analysts, these positive developments likely presented an attractive buying opportunity for overseas funds when Adani dollar bond prices sank to deeply distressed levels post the Hindenburg report. With the risks addressed and business fundamentals remaining solid, several funds saw value in gradually raising their stakes. Neuberger Berman cited discussions with Adani management and confidence in the group’s deleveraging plan for upping its position.
Indeed, a bulk of Adani Group’s 15 dollar bond issues now trade above 80 cents, an established mark to gauge price recovery from distress territory. Several bonds even surpass their pre-Hindenburg report prices. This rally reflects investors’ renewed faith as financial health indicators like falling net debt and on-track expansion plans validate the management’s actions.
Not all funds increased exposure though. UBS trimmed its holdings by over 20% to $44 million, while Temasek fully offloaded its Adani debt securities last year. Nonetheless, for the likes of BlackRock and Neuberger Berman who augmented stakes, the script has played out positively as visibility improves on the infrastructure conglomerate’s deleveraging story. Their early conviction seems validated as Adani assets stabilize under the current market environment.
