PM to woo global sovereign wealth funds

Rutam Vora Ahmedabad | Updated on January 14, 2019 Published on January 14, 2019

Prime Minister Narendra Modi

27 sovereign wealth and pension funds to hold court in Gandhinagar

Prime Minister Narendra Modi will chair a meeting of the global sovereign wealth funds and pension funds next week in Gandhinagar, paving the way for long-term finance for crucial infrastructure and public projects in the country.

The meet, a first for India, will be attended by representatives of about 27 global sovereign wealth and pension funds and institutions from Canada, the US, Europe, West Asia, and South Asian nations.

Roundtable meet

On the inaugural day of Vibrant Gujarat Global Summit at Mahatma Mandir in Gandhinagar, Modi will have a roundtable meet with these leaders to discuss the investment potentials of some ambitious projects such as smart cities, mass transport and public utility in India.

“For the first time in India, such a congregation of global sovereign wealth funds is taking place. They are great sources of finance. India is now an important destination. Their last meet was held in St Petersburg,” JN Singh, Chief Secretary of Gujarat, told Businessline.

The meet is being organised by the Union Ministry of Finance and Government of Gujarat.

Major participants

The 27 funds include top names such as IFC, Pacific Investment Management Company, Vanguard from the US, Roadis (Spain), Avi Alliance (Germany), Government Pension Investment Fund (Japan) Asian Infrastructure Investment Bank (China) and Canada's British Columbia Investment Management Corporation, Public Sector Pension Investment Board and Ontario Municipal Employees Retirement System besides others.

Last year at St Petersburg International Economic Forum (SPIEF), Russian President Vladimir Putin had interacted with captains of these funds managing trillions of dollars worth of funds.

“In terms of market cap, India now ranks among the top 7 countries. The sustained local flow and huge jump in mutual fund schemes offers good liquidity to global investors. The share of sovereign wealth/pension funds in the overall FPI holdings in India is minuscule and there is scope for them to increase exposure,” said Rusmik Oza, Head of fundamental research at Kotak Securities. However, experts have underlined challenges of efficiency and transparency in implementation of public projects in India to make global funds interested. Another concern is the depreciation of the rupee against the dollar as it may eat into the returns that the funds look for.

On the sustainability of funds, sovereign wealth funds are seen as promising alternative to FII inflows. “In the last two years, a large portion of flows from FPIs has come in the form of passive investments (ETFs). This kind of flows in ETFs may not be considered long-term and hence is at risk of flowing out any time. Sovereign wealth/pension funds will usually invest in large and stable companies having good dividend policies with a long-term horizon. Hence, these funds could be more sticky and may not move it with any sharp fall in the markets,” added Oza.

The 9th edition of the Vibrant Gujarat Global Summit will be held during January 18-20.

Published on January 14, 2019
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