Capital Group Bets $2 Billion on Adani, Pivoting Away from Reliance

As per The Bloomberg report, Global asset manager Capital Group has significantly increased its exposure to Adani Group companies while continuing to reduce its stake in Reliance Industries, signalling a notable shift in investment allocation between two of India's largest corporate groups.  

The move comes as investors increasingly focus on infrastructure, energy transition and manufacturing opportunities linked to India's next phase of economic growth. 

Capital Group Expands Investments Across Adani Companies 

The Los Angeles-headquartered investment firm, which manages more than $3.3 trillion in assets, has acquired stakes worth over $2 billion across three listed Adani Group companies in recent weeks, according to people familiar with the matter. 

On May 5, Capital Group purchased nearly 2% of Adani Ports and Special Economic Zone through open-market transactions valued at ₹74.86 billion ($776 million), according to BSE block-deal data. 

Infrastructure And Energy Themes Attract Investor Interest 

The market performance of key Adani companies has also been strong over the past year. Adani Power shares have gained 94%, while Adani Green Energy and Adani Ports have risen 35% and 25%, respectively. 

The renewed investor interest also follows an improvement in market sentiment towards the conglomerate after the US Department of Justice reportedly moved to drop criminal charges against Gautam Adani, reducing a major legal overhang that had weighed on investor confidence. 

Reliance Holdings Continue to Decline 

While increasing exposure to Adani companies, Capital Group has steadily reduced its position in Reliance Industries over several years. 

Data compiled by Bloomberg shows the company held approximately 142 million Reliance shares at the time of March end, in comparison with around 500 million shares six years ago and the highest holding of 755 million shares in March 2017. 

Despite remaining one of the most widely owned Indian stocks among global institutional investors, Reliance has experienced slower earnings growth and more moderate share-price performance following years of expansion across telecommunications, retail and energy businesses. Over the last 1 year, Reliance Industries shares have declined 8.36%. 

Read More: Adani Enterprises Shares Rise Nearly 1% After Implementing Jaiprakash Associates Resolution Plan! 

Conclusion 

Capital Group's latest portfolio moves highlight changing investor preferences within India's corporate landscape. Increased investments in Adani Group companies and reduced exposure to Reliance Industries underscore a growing focus on infrastructure, energy transition and manufacturing themes that are expected to drive the next stage of India's economic expansion. 

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