Says a CEO of a leading global private equity fund with operations in India and China: “China is losing its lustre primarily because of the uncertainties due to the US-China trade tensions. India, despite its economic crises due to Covid-19, still looks like a more attractive long-term bet.”
The other good news
is that west Asian sovereign wealth funds
have been on fire as far as their investments in India are concerned. According to VCCEdge, in 2020 to date, top west Asian sovereign funds, including Abu Dhabi Investment Authority (ADIA), Public Investment Fund (PIF), Mubadala Investment Company, Kuwait Investment Authority and Investment Corporation of Dubai and Qatar Investment Authority, together put in $ 7.38 billion in 14 deals in India. These accounted for more than 20 per cent of all private equity investments in the country.
In 2019 the same big boys had put in a mere $0.98 billion in 10 deals, accounting for less than 3 per cent of all PE money.
However, the story is different when it comes to Singapore’s sovereign funds such as Temasek and GIC. They reduced their exposure to India, and invested $1.6 billion in 16 deals — a drop of 30 per cent compared to 2019, when they had invested $2.1 billion in the country.
The importance of India for the west Asian sovereign funds can be gauged by Mubadala, which has a war chest of $230 billion. The fund has invested $11 billion in 2020 till 1 December, with India getting $2.05 billion, or 18 per cent of its investments in the year till now. And while the fund’s investments went up by 46 per cent in 2020 over last year, in India it has gone up even more dramatically, since last year it had not invested in the country at all.
Mubadala’s India investments, which have been primarily in Reliance’s retail and technology business, is consistent with Abu Dhabi’s strategy to reduce its dependence on oil revenue and shift to new areas like technology, retail, financial services, telecom, amongst others.
This year, the global trend amongst sovereign funds has been to reduce capital deployed — it has fallen by 36 per cent across sovereign funds as compared to last year. Most west Asian funds have followed the same route, with the value of their investments slumping between 40 per cent and 50 per cent, except for Mubadala and PIF.
Despite that, most have upped their stakes in India. For instance, ADIA has raised its investments in India by nearly fourfold through four deals worth $2 billion, even though its overall deployment across the globe has fallen by over 45 per cent.