Irony or sinister plot? George Soros’ 'friend' invests in Adani Group

In a surprising twist, billionaire Stanley Druckenmiller, a long-time ally of George Soros, has recently made a significant investment in the Adani Group, the same conglomerate that Soros targeted through the short-seller Hindenburg Research in 2023. This development has raised eyebrows in financial circles, prompting questions about whether this move is a strategic shift or part of a larger, more complex narrative.

The saga began in early 2023 when Hindenburg Research released a damning report alleging accounting fraud and stock manipulation within the Adani Group. These allegations, vehemently denied by the conglomerate, led to a sharp decline in its market value, with over $150 billion wiped off at one point. The fallout was severe, and the group was forced to scrap a ₹20,000 crore equity issue shortly after the report’s release.

However, in a remarkable turnaround, the Adani Group has managed to regain its footing. In a recent institutional sale, Druckenmiller’s family office-led investment firms made their maiden bet on the group by purchasing shares in Adani Energy Solutions, the conglomerate’s power transmission unit. The issue, which was oversubscribed six times, attracted demand exceeding ₹50,000 crore against an issue size of $1 billion.

This fundraiser is particularly significant as it marks the Adani Group’s first public equity issue since the Hindenburg report. The success of this Qualified Institutional Placement (QIP) is being viewed by many as a powerful vote of investor confidence in the group, which has been steadily recovering its lost market value.

Antecedents of George Soros' 'friend'

Stanley Druckenmiller, known for his role alongside George Soros in the infamous 1992 attack on the British pound, has a reputation for making bold financial moves. Together, they bet against the pound, leading to its collapse and pocketing over $1 billion in profits. Now, decades later, Druckenmiller’s decision to invest in Adani stocks is seen by some as ironic, given Soros’ earlier stance against the conglomerate.

Druckenmiller’s investment was not made in isolation. Alongside Duquesne Family Office, other prominent US-based long-only funds, including Driehaus Capital Management and Jennison Associates, participated in the QIP of Adani Energy Solutions. The ₹8,340 crore ($1 billion) issue saw over 120 investors seeking shares in the company, which is involved in power transmission, distribution, and smart metering.

The timing of this investment, coupled with the stature of the investors involved, suggests a growing trust in the Adani Group’s strength and future prospects. Despite the scepticism surrounding Druckenmiller’s move, it is unlikely that a prestigious investor like him would deliberately create a bubble. Duquesne, Driehaus, and Jennison are known for their strong performance and clean business practices, and they typically invest only in companies with high governance standards.

Why this investment can be trusted

The Adani Group has a history of attracting long-only investors with a long-term vision. In recent years, it has brought in major investors, including GQG Partners, the Qatar Investment Authority (QIA), and the International Holding Company (IHC). These existing investors also participated in the recent QIP, alongside other global names such as BlackRock, Jupiter Asset Management, Nomura Asset Management, and Eastspring.

The QIP is the largest public equity raise in the energy sector since the Hindenburg report last year, and the demand generated has sent a strong signal to the market. On 1 August, Adani Energy Solutions’ stock surged by over 15% in intraday trading before closing 11.24% higher on the Bombay Stock Exchange.

Adding further credibility to the investment, several domestic mutual funds, including SBI Mutual Fund, HDFC Mutual Fund, Axis Mutual Fund, and Bandhan Mutual Fund, participated in the QIP. Insurance companies such as SBI Insurance, SBI Pension, and ASK Asset Management were also involved, indicating broad-based support from Indian financial institutions.

This renewed investor confidence comes as Adani Enterprises reported more than doubling its first-quarter profit on 1 August, with consolidated net profit rising to ₹1,455 crore for the quarter ended 30 June, compared to ₹674 crore a year earlier. The group’s new energy segment, which includes solar manufacturing and wind turbine businesses, posted a 3.6% increase in earnings before interest, taxes, depreciation, and amortisation (EBITDA) to ₹1,642 crore. This segment now contributes 38% of the company’s total EBITDA, which jumped 48% to ₹4,300 crore.

Overall, revenue from operations rose by 12.4% to ₹25,472 crore, underlining the group’s recovery and growth trajectory. The new energy division, which accounts for 15% of net revenue, benefited from a surge in volumes and prices of solar modules.

Why cynics lack credibility

While some sceptics suggest that Druckenmiller’s investment could be part of a broader strategy to inflate a bubble, this theory appears less credible given the track record of the investors involved. The Adani Group’s ability to attract such high-calibre investors, both domestic and international, points to a solid foundation and long-term potential.

The financial world will be closely watching as this story unfolds. The US Securities and Exchange Commission (SEC) and the Securities and Exchange Board of India (SEBI) are likely to monitor these developments closely, ensuring that market forces operate transparently and fairly. As the dust settles, one thing is clear—the days of unchecked market manipulation may be numbered, and the future could well belong to honest growth and sustainable investments.