Capital Group, one of the world’s largest investment management firms, is increasing its investment in Adani Group companies, while gradually reducing its stake in Reliance Industries Limited. This is indicative of a change in the preferences of foreign investors between India’s two largest groups.
According to the ET report, this Los Angeles-based money manager has bought stakes worth more than $2 billion i.e. more than Rs 17 thousand crore in three companies of Adani Group in recent weeks. On May 5, Capital Group bought about 2% stake in Adani Ports and Special Economic Zone Ltd for Rs 74.86 billion through an open-market transaction, according to BSE block-deal data.
Capital Group manages more than $3.3 trillion in assets worldwide. It has also accumulated between 1.5% to 2% stake in Adani Power Limited and Adani Green Energy Limited by purchasing from the market. He kept the condition of anonymity because this information is private.
In a market that has lost its luster in the eyes of some investors due to the lack of companies involved in global artificial intelligence (AI) development, Adani’s companies are being considered a rare and profitable bet to boost India’s infrastructure development, energy transition and manufacturing. This change is also a sign of a major change taking place in the direction of betting on the next phase of India’s economic growth.
The performance of these companies was good
Shares of Adani Power, Adani Green and Adani Ports have increased by 94%, 35% and 25% in a year. A Capital Group spokeswoman said she could not comment on individual stocks or shareholdings. A representative of Adani Group did not respond to a request for comment.
This bias towards Adani shares in particular indicates a recovery in investor confidence after months of regulatory scrutiny and market volatility. The group managed to overcome a major hurdle when the US Justice Department recently demanded the withdrawal of criminal charges against Gautam Adani. It moves the billionaire founder closer to resolving the legal risk that once threatened the future of his vast ports-to-power business empire.
Investment in Mukesh Ambani’s company has been reduced
On the other hand, Capital Group’s investment in Reliance has declined rapidly in the last few years. According to Bloomberg data, the company held about 142 million shares of Reliance Industries at the end of March, compared to about 500 million six years ago and 755 million at its peak in March 2017.
Although Reliance remains one of the country’s most held and closely tracked companies among global funds, its earnings growth and stock performance have slowed somewhat after years of rapid expansion in the telecom, retail and energy sectors. Shares of Reliance Industries have declined by 8.36% in the last one year.
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