Why Rajiv Jain is betting on an Indian yoga televangelist

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GQG founder Rajiv Jain has one main argument when he defends investing some of his firm’s $93bn into a business run by a rightwing, yoga televangelist with ties to India’s prime minister: growth.

“There is no political angle,” Jain told the Financial Times after his near $300mn investment in Baba Ramdev’s Patanjali Foods became public last week.

Instead, Jain said he wants Patanjali to continue selling nutritional supplements, biscuits and ghee as fast as possible to as many people as possible rather than follow other fast-moving consumer goods companies in their pursuit of margin — “that I think is their Achilles heel.” he said.

It is the second high-profile investment Jain has made in an Indian company this year.

In March, GQG invested almost $2bn in the embattled conglomerate of infrastructure tycoon Gautam Adani, who is known to have close ties to prime minister Narendra Modi, shortly after short seller Hindenburg Research released a scathing report alleging accounting fraud and stock market manipulation. The company denied the claims.

“Just like Adani, there’s this negative halo effect for anything that is connected to Modi,” said Jain, adding that the current Indian government is the most hands off in terms of business the country has seen in decades. 

Jain said GQG had been looking at Patanjali for several years and commended Ramdev’s business acumen. “For a school dropout he will rattle off margins at every division and the guy does yoga half the day,” he said. “He’s very impressive.”

Swami “Baba” Ramdev, whose YouTube channel has almost 10mn subscribers, shot to national fame in India through his televised yoga classes. But he has also courted controversy for his support of rightwing Hindu causes and views on homosexuality, which he previously referred to as a disease curable by yoga. 

Ramdev has also been closely associated with Modi’s ruling Bharatiya Janata Party. He campaigned alongside Modi in 2014, helping propel him to victory in the national elections and leading crowds in chanting slogans associated with Hindu nationalist ideology. But in 2019, the yogi insisted he had “withdrawn myself politically” and would not be endorsing a party.

“He’s a provocative figure so he does make these comments but that doesn’t change the underlying business momentum,” said Jain. “There’s a professional team underneath who run the business.”

Patanjali made its public market debut in 2019 when it bought bankrupt edible oil company Ruchi Soya Industries out of insolvency. The company has grown significantly since and become a homegrown challenger to large consumer goods groups such as Hindustan Unilever and Nestlé India. 

Ramdev’s ambitions extend beyond India. “By 2025, Patanjali will be the biggest [fast-moving consumer goods] brand in the world,” he boasted in an address to a business conference in 2018. Last year, Ramdev told reporters that he planned to list four of the group’s companies, although it remains unclear when that will happen.

Patanjali’s share price is up more than 20 per cent in the past 12 months. The company’s profits before tax for the 2022-2023 business year were Rs11.8bn (roughly $144mn), up by almost a tenth compared to the previous year.

Patanjali’s most recent quarterly earnings were buffeted by price fluctuation in edible oils, its largest unit in terms of revenues. However its food business, from biscuits and ghee to health foods, clocked 18.5 per cent revenue growth compared to the previous quarter, hitting Rs18bn (about $220mn).

GQG has owned stakes in other consumer goods businesses in India, such as Nestlé and Unilever. Jain said the firm ended up paying more than expected for Patanjali shares because the company was competitively bid by foreign investors.

Companies in the Patanjali group, which include “herbomineral” maker Patanjali Ayurved, previously held over 80 per cent of Patanjali Food’s shares. However, Indian securities laws require 25 per cent of a listed company’s shares to be held by outside investors and in March this year India’s securities regulator Sebi froze trading in Patanjali shares over the violation.

Patanjali Foods offered shares for sale to become compliant, with bids ranging from approximately Rs1,104 per share to Rs1,138, said a person close to the transaction.

As well as publishing tips on yoga, Ramdev promotes ayurvedic Patanjali products, from skincare to weight loss tablets. 

Ancient ayurvedic medicine aims to restore balance in a person’s mind and body, rather than focusing on curing diseases. After coming to power in 2014, the Hindu nationalist BJP government created a Ministry of Ayush to promote ayurvedic healthcare.

But Ramdev has been in trouble for promoting Patanjali to his admirers before and was served with a warning notice by the securities regulator, the Business Standard newspaper reported, after a video circulated on social media of him claiming that buying shares in his company would make his followers millionaires. 

Indian media also reported that Ramdev was forced to apologise last year for saying women “look good when, like me, you wear nothing”, after opposition politicians criticised the remarks as insulting to women. 

“I’m sure [Ramdev] made some statements but I mean who doesn’t?” said Jain. “Companies make random statements, it doesn’t mean that the company is not a buy anymore. Look at, for example, Elon Musk.”