(MENAFN- Khaleej Times) India has replaced China as the most sought-after investment destination for global sovereign wealth funds in the private sector in 2020, riding the crest of a dramatic surge in FDI flow from Gulf-based SWFs.
In 2020 to date, SWFs from across the world 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), according to data by New York-based Global SWF, which tracks over 400 State-Owned Investors (SOI), including SWFs and pension funds.
In its latest newsletter, Global SWF said that India overtook its rival amid efforts to ramp up FDI in infrastructure, while China was bogged down in a tit-for-tat trade war with the US that cooled investor interest, particularly in tech which saw SOI investment in the sector slump by 77 per cent in 2019.
'Although China demonstrated resilience in the face of the pandemic and bounced back from recession, it continued to be eclipsed by India in 2020 despite the South Asian rival's deep economic woes.
'During the first 11 months of 2020, India has notched up around 46 per cent growth in SWF investment compared to the whole of 2019 to around $15 billion, while allocations to China are down by 30 per cent to $4.5 billion.
SWFs from the GCC, including Abu Dhabi Investment Authority (Adia) and Mubadala, Saudi Public Investment Fund (PIF), Investment Corporation of Dubai, Qatar's QIA, and Kuwait's KIA together account for more than $7.5 billion of this.
These SOIs have been lured by top Asian billionaire Mukesh Ambani's $160 billion Reliance conglomerate, which offered stakes in its telecommunications and retail verticals: the mobile and data provider Jio, Reliance Retail Ventures Ltd. (RRVL) and its digital fiber network.
Despite hit by a 'technical recession, Asia's third largest economy, also recorded a 15 per cent jump in overall FDI flow to $39.9 billion in the second and third quarters year-on-year, partly due to sweeping 'global anti-China sentiments as investors strategised to tap alternative supply chains, according to a report by CARE Ratings.
Although the gap between the foreign capital deployed in the two countries widened this year, the trend started in 2018, when for the first time in two decades, India drew more FDI than its neighbour with 253 inbound deals valued at $39.515 compared with China's 397 inbound deals worth $33.02 billion. India's appeal was enhanced by stable fundamentals, a bankruptcy code and fresh opportunities in sunrise sectors, according to Dealogic, a global financial markets platform.
According to Dealogic, a global financial markets platform, India's appeal was enhanced by stable fundamentals, a bankruptcy code and fresh opportunities in sunrise sectors.
In terms of private market strategy, sovereign investment in India shifted dramatically from roads and renewables to retail and communications in 2020. Toll roads have been a favoured target of SOIs in recent years in the rapidly developing Indian market, encouraged by tax breaks, privatisation and co-investment opportunities with the government. —
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