Worsening Euro zone debt situation and wobbly US recovery behind trend

The Abu Dhabi Investment Authority (ADIA), the world's largest sovereign fund with assets under management of $627 billion, has set up a new “Active India” portfolio in its Internal Equities department to scale up investments in the country. This is part of a broader trend among sovereign wealth funds and multilateral investors looking to up their India exposure, amid worsening signs of Euro zone debt worries and a wobbly US recovery.

ADIA's India portfolio is one of two new portfolios floated by the fund, the other being for Latin America. With this, the sovereign fund hopes to commence the build-out of teams under experienced fund managers to tap investment avenues, an executive privy to the exercise told Business Line.

IFC, the World Bank's private equity arm, too has stepped up its India play. Three of the five investments announced by it since March this year in the South Asian region were in India. This includes an equity investment of about $45 million in Kolkata-based NBFC Magma Fincorp Ltd as well as funding for Hyderabad-based speciality chemicals manufacturer Vivimed Labs Ltd and Simran Wind Project Private Ltd.

The $236-billion California Public Employees' Retirement System, the largest public pension fund in US, too is keen on the domestic infrastructure sector. “We are exploring some areas in infrastructure. India allocations are likely to increase over time,” said Mr Farouki Majeed, Senior Investment Director at CalPERS had said in the context of the fund's India plans. CalPERS' current allocation to Asia stands at around 9 per cent. Of the total $21.7 billion it has invested in the region, $5.3 billion is in China and $1.9 billion in India. According to industry players, Singapore-based Temasek Holdings too is keen on India, after having taken an exposure in GMR Energy and the National Stock Exchange.

Dutch pension fund asset manager PGGM, Norway's Government Pension Fund (Global) and Denmark's LD Pensions are among the global pension funds looking at India. PGGM, the $96 billion Dutch pension fund asset manager, had earlier announced a cornerstone investment of up to $60 million in a global microfinance equity fund in India.

(This article was published on September 15, 2011)
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