SOVEREIGN FUNDS FLOW: INDIA

REPLACES CHINA AS MOST

SOUGHT-AFTER DESTINATION
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13-12-2020
 What are SWF?
A sovereign wealth fund is a state-owned investment fund
comprised of money generated by the government.
Sources of SWF: Popular sources are surplus reserves from state-
owned natural resource revenues, trade surpluses, bank
reserves that may accumulate from budgeting excesses, foreign
currency operations, money from privatizations, etc.

Some countries have sovereign wealth funds that can be similar to

venture capital for the private sector.
 The top five largest SWFs by assets as of
August 2020 included:
1. Norway Government Pension Fund Global $1,073,590,000,000
2. China Investment Corporation $940,604,000,000
3. Abu Dhabi Investment Authority $579,621,120,000
4. Kuwait Investment Authority $533,650,000,000
5. Hong Kong Monetary Authority Investment Portfolio
$528,054,000,000
 India Surpasses China
India has quietly replaced China as the most sought after
destination for global sovereign wealth funds investment in the
private sector — a sign of the country’s growing attraction for
investors.

Data has been released by Global SWF.

 India got 3 times investments from SWF
According to data by New York-based Global SWF, which tracks over
400 sovereign wealth funds, in the year 2020 to date, these funds
deployed capital worth a record $14.8 billion in India, which is nearly
three times more than what they have put in China ($4.5 billion).
 Trend started in 2019 Itself
The trend started in 2019, when SWFs invested $10.1 billion in India,
surpassing the $6.4 billion it did in China.
 Why?
A CEO of a leading global private equity fund with operations in India
and China says: “China is losing its lustre primarily
because of the uncertainties due to the US-China
trade tensions. India, despite its economic crises
due to Covid-19, still looks like a more attractive
long-term bet.”
 Where is the money coming from?
West Asian sovereign wealth funds have been on fire.

According to VCCEdge, in 2020 to date, top west Asian sovereign

funds, including Abu Dhabi Investment Authority (ADIA), Public
Investment Fund (PIF), Mubadala Investment Company, Kuwait
Investment Authority and Investment Corporation of Dubai and
Qatar Investment Authority, together put in $ 7.38 billion in 14 deals
in India. These accounted for more than 20 per cent of all private
equity investments in the country.
In 2019: Mere $0.98 billion.
 Most Imp. is Mubadala
The importance of India for the west Asian sovereign funds can be
gauged by Mubadala, which has a war chest of $230 billion. The fund
has invested $11 billion in 2020 till 1 December, with India getting
$2.05 billion, or 18 per cent of its investments in the year till now.
 Why Mubadala is so invested in India?
Mubadala’s India investments, which have been primarily in
Reliance’s retail and technology business, is consistent with Abu
Dhabi’s strategy to reduce its dependence on oil revenue and shift
to new areas like technology, retail, financial services, telecom,
amongst others.
 Interest Declined from Singapore
However, the story is different when it comes to Singapore’s
sovereign funds such as Temasek and GIC.

They reduced their exposure to India, and invested $1.6 billion in 16

deals — a drop of 30 per cent compared to 2019, when they had
invested $2.1 billion in the country.
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