The G20 Summit in Delhi was accompanied by fresh announcements by state-owned investors intent on shifting focus to India, amid ongoing de-China-ization by Western funds and growing Middle Eastern interest in the South Asian economic behemoth’s massive potential.
Infrastructure and real estate have been dominant targets for sovereign investors in India, while the lion’s share of private equity has been absorbed by units owned by the country’s powerful industrial magnates, such as Mukesh Ambani’s Reliance empire, as well as the quasi-SWF the National Investment and Infrastructure Fund (NIIF).
Venture capital has grown, however, and despite downward pressure on valuations in recent funding rounds, state-owned investors continue to see India as an attractive prospect – and the government is seeking to boost VC investment further, creating a financial and investment hub to rival Dubai, Hong Kong and Singapore.
Saudi Arabia’s Investment Minister Khalid Al Falih said this week that the Public Investment Fund (PIF) could set up an office in the Gujarat International Finance Tec-City (GIFT), which is being established as India's tax-neutral financial services center. Falih was speaking on the sidelines of Saudi Crown Prince Mohammed bin Salman's state visit to India, which saw a range of pacts and the formation of a joint task force to oversee US$100 billion of Saudi investment – half of which is being devoted to a delayed refinery project. The announcement comes a couple of months after the Abu Dhabi Investment Authority (ADIA) disclosed its plans to set up an office in GIFT City with an ambition to establish a “multi-billion dollar” portfolio.
The Korea Investment Corporation (KIC) is also in the process of establishing a new office in Mumbai by the year-end, joining CPP, Khazanah, GIC, OTPP and Temasek, which have created investment teams in India’s financial capital. It will be KIC’s fifth office overseas, following offices in New York, London, Singapore and San Francisco. KIC’s move into India coincides with a drive to expand investment in alternatives to 25% by 2025, from 17.5% in 2021, much of which is expected to consist of foreign assets. A large chunk is being devoted to private equity, with the likelihood of a venture capital push.
Its Singaporean peer Temasek is also planning to boost private equity investments in India with up to US$10 billion set to be invested over the next three years, according to an announcement in July. Respresenting 6% of its portfolio, Temasek’s Indian assets total approximately US$17 billion, having backed startups like ride-hailing app Ola and online grocery delivery service Zomato. Temasek’s planned allocation to India over the next three years would indicate a sustained pace of investment that is likely to surpass the rate of AUM growth and see India comprise 10% of Temasek’s assets by end-2026. Its venture capital transactions are largely funneled through its VC subsidiary Vertex.
Meanwhile, Ontario Teachers (OTPP) is helping lead a Canadian charge into Indian tech sector venture capital. Last week, Avid Larizadeh Duggan, senior managing director of OTTP’s Teachers’ Venture Growth (TVG), said, “There are massive opportunities [from] the population growth and the digital transformation that is happening there. [They are] leaping some of the hurdles that we had [in the west] because the tech is there.” TVG opened an office in Mumbai in September 2022, but is unlikely to relocate to GIFT City.
