11-Mar-2024: All eyes on GQG co-founder Rajiv Jain; $300 million block tipped (afr.com)

AFR Street Talk article, by Sarah Thompson, Kanika Sood and Emma Rapaport, Mar 11, 2024 – 12.25pm.

This is an interesting AFR "Street Talk" article in that it is painting the GQG co-founder and CIO Rajiv Jain, who’s sitting on 68.8 per cent – or $4.5 billion worth – of the fund manager, as being willing to sell down to give them a shot at the ASX200 Index. He would potentially sell up to 5% of his position and if GQG is subsequently included in the S&P/ASX200, that would potentially "open the floodgates for passive funds which have a mandate to track the index."

Rajiv Jain, CIO of GQG. Arsineh Houspian

Excerpt:

It appears Pacific Current Group’s $257 million block trade in GQG Partners on Thursday was the tip of the iceberg.

Street Talk can reveal investment banks are elbows-out ahead of a potential selldown from GQG co-founder and CIO Rajiv Jain, who’s sitting on 68.8 per cent – or $4.5 billion worth – of the fund manager.

Sources reckon Jain would look to sell about 5 per cent of his stake to give GQG a shot at being included in the ASX 200. In turn, that would open the floodgates for passive funds which have a mandate to track the index.

Macquarie Capital’s desk, in particular, was sniffing out interest among fund managers on Friday. UBS and Goldman Sachs, which helped float the company in late 2021, are also expected to pitch for the lucrative trade.

Jain co-founded GQG in 2016, after 21-years at Vontobel Asset Management. Funds under management stood at $US137.5 billion ($207.6 billion) as of February 29, while GQG stock has risen 50 per cent over the past 12-months.

The firm’s $5.91 billion float meant Jain’s stake dropped from 86 per cent to 68.8 per cent. As is customary, his shareholding was escrowed until after GQG’s half-year results to June 2022 were published. That was 18-months ago, but he’s yet to sell a single share.

GQG sold shares at $2 apiece in its IPO bookbuild and the stock has only just returned to similar levels this year, after trading as low as $1.24 a share. Pacific Current’s selldown, on Thursday, was done via UBS at $2.16 a share or a 3.6 per cent discount to the last close.

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The rationale is that Index inclusion is based on the market cap, but "free float adjusted" so shares held by founders and other insiders as well as long-term "Subs" are not included for the purposes of index inclusion criteria - the largest shareholder selling down in this way (as described above) has the potential of increasing the free float and giving them a better chance of index inclusion.

Disc: I do not hold PAC or GQG shares.