Attracted by political stability, a growing middle class, and a reforms push making it more appealing for foreigners to invest, sovereign wealth funds are buying stakes in India businesses from airports to renewable energy.
Wealth and state pension funds are investing in private markets, to complement an existing focus on stocks and bonds. Foreign institutional investor flows into Indian equities are $11 billion year-to-date, surpassing the total annual tally in each of the four previous years and setting 2019 on course for the highest annual inflows since 2012. Bombay Stock Exchange’s Sensex, India’s benchmark, has soared nearly 10% year-to-date.
According to Seattle Washington-based PitchBook, a financial data and software company, private equity deals in India totaled $19 billion in 2018, the highest level in at least a decade, and sovereign wealth funds and pension funds participated in about two-thirds of this amount.
Among recent deals:
- Singapore’s GIC sovereign wealth fund and the Abu Dhabi Investment Authority (ADIA) made a further investment of $495 million in renewable energy firm Greenko Energy Holdings
- ADIA and India’s National Investment & Infrastructure Fund bought a 49% stake in the airport unit of India’s GVK Power & Infrastructure
- Canada Pension Plan Investment Board and GIC participated in a $145.8 million buyout of Oakridge International School, an operator of schools in India.
ADIA, the world’s third-biggest sovereign wealth fund, focuses on infrastructure, real estate and private equities, in India. Its increased interest in India is driven by the country’s strong growth potential, positive demographics — more than half of India’s 1.3 billion population is aged under 25 — and continued economic development.
