India continues to attract Foreign Capital

The headline news in all the newspapers and TV channels over the last two months has all been about the economic “slowdown”. Repeated references to the automobile industry slowdown and job losses dominate the news.  The question asked is it a cyclical or structural slowdown?

So, is it the end of the road for India?  Is it only gloom and doom across the board?

The resounding answer to that is a big “No”, if you go by the Foreign Direct Investments which are made just in the last 2 months.

India continues to be an important investment destination for global investors.  Today, we will look at foreign investments in India both through direct investments by large companies, Sovereign Wealth Funds as well as PE/VC investments.

Foreign Direct Investments in India in the months of July & August 2019

• Infrastructure– GIC, which is the Sovereign wealth fund of Singapore is investing Rs 4,400 crores in IRB Infrastructure’s Road business
• Textile Fashion– Blackstone, the world’s largest P/E firm is investing 250 million USD in Future Lifestyle Fashions
• Education– Blackstone is also investing Rs 1,000 crores in Aakash Educational Services
• Infrastructure– National Investment and Infrastructure Fund (NIIF), which is India’s largest infrastructure fund has received a 2 billion USD commitment from Australian and Canadian pension funds
• Media and Entertainment– Invesco Oppenheimer fund is investing Rs 4,200 crores for a 11% stake in Zee Entertainment
• Clean energy– Abu Dhabi Investment Authority (ADIA) and GIC are investing 329 million USD in clean energy provider producer Greenko Energy Holdings after investing 300 million USD in June
• At the recent Reliance Industries AGM, it was announced that the Saudi oil giant is taking a 20% stake in their oil to chemicals business for 15 Billion USD.
• Amazon taking up a 49% stake in Future Group

Key Statistics Overall – Foreign Investments 2018/2019

• PE/VC investments in India was at an all-time high of 8.3 Billion USD in July 2019
• Net FDI as per RBI for the latest quarter (April to June 19) is 14.5 Billion USD (up 50% from 9.5 Billion USD April to June 2018)
• FDI investments in India for the latest year ending March 2019 (FY 18-19) was 64.37 Billion USD, which is an all-time high

In the noise of  economic slowdown, are we missing to see the big picture?  High quality business continues to attract capital from global investors.

Whats the message for investors?

Keep the faith in the India story.  Foreign Investors continue to do so.  You rarely get all the conditions perfect for investments.  When the foreign capital is chasing the Indian businesses like never before, why we should be afraid to invest in our home grown companies?

The business case for investing in Indian Equities for the long term has only become stronger now with the correction in valuations.  Money is to made by investing in tough times. The current macro environment and the liquidity challenges has made valuations more attractive.

Seasoned fund managers now have the opportunity to pick up several quality companies at 2014 valuations.  Top class fund managers who have the experience of investing in such down turns have delivered rich returns in the past and are well poised to do the same again.

The headline news in all the newspapers and TV channels over the last two months has all been about the economic “slowdown”. Repeated references to the automobile industry slowdown and job losses dominate the news.  The question asked is it a cyclical or structural slowdown?

So, is it the end of the road for India?  Is it only gloom and doom across the board?

The resounding answer to that is a big “No”, if you go by the Foreign Direct Investments which are made just in the last 2 months.

India continues to be an important investment destination for global investors.  Today, we will look at foreign investments in India both through direct investments by large companies, Sovereign Wealth Funds as well as PE/VC investments.

Foreign Direct Investments in India in the months of July & August 2019

• Infrastructure– GIC, which is the Sovereign wealth fund of Singapore is investing Rs 4,400 crores in IRB Infrastructure’s Road business
• Textile Fashion– Blackstone, the world’s largest P/E firm is investing 250 million USD in Future Lifestyle Fashions
• Education– Blackstone is also investing Rs 1,000 crores in Aakash Educational Services
• Infrastructure– National Investment and Infrastructure Fund (NIIF), which is India’s largest infrastructure fund has received a 2 billion USD commitment from Australian and Canadian pension funds
• Media and Entertainment– Invesco Oppenheimer fund is investing Rs 4,200 crores for a 11% stake in Zee Entertainment
• Clean energy– Abu Dhabi Investment Authority (ADIA) and GIC are investing 329 million USD in clean energy provider producer Greenko Energy Holdings after investing 300 million USD in June
• At the recent Reliance Industries AGM, it was announced that the Saudi oil giant is taking a 20% stake in their oil to chemicals business for 15 Billion USD.
• Amazon taking up a 49% stake in Future Group

Key Statistics Overall – Foreign Investments 2018/2019

• PE/VC investments in India was at an all-time high of 8.3 Billion USD in July 2019
• Net FDI as per RBI for the latest quarter (April to June 19) is 14.5 Billion USD (up 50% from 9.5 Billion USD April to June 2018)
• FDI investments in India for the latest year ending March 2019 (FY 18-19) was 64.37 Billion USD, which is an all-time high

In the noise of  economic slowdown, are we missing to see the big picture?  High quality business continues to attract capital from global investors.

Whats the message for investors?

Keep the faith in the India story.  Foreign Investors continue to do so.  You rarely get all the conditions perfect for investments.  When the foreign capital is chasing the Indian businesses like never before, why we should be afraid to invest in our home grown companies?

The business case for investing in Indian Equities for the long term has only become stronger now with the correction in valuations.  Money is to made by investing in tough times. The current macro environment and the liquidity challenges has made valuations more attractive.

Seasoned fund managers now have the opportunity to pick up several quality companies at 2014 valuations.  Top class fund managers who have the experience of investing in such down turns have delivered rich returns in the past and are well poised to do the same again.