INSUBCONTINENT EXCLUSIVE:
stability, a growing middle class and reforms making it more enticing for foreigners to invest.Wealth and state pension funds are expanding
their horizons to private markets, to complement an existing focus on stocks and bonds."India is popular with sovereign wealth funds," said
Tihir Sarkar, London-based partner at Cleary Gottlieb, which counts several prominent sovereign funds as clients."Almost every jurisdiction
in the western world is raising the bar for entry for foreign investors but in India it's the other way round
There's also the attraction of the demographics and a lot of assets that sovereign funds like, such as infrastructure, where there's a
huge appetite for foreign funding."Prime Minister Narendra Modi's election win last month consolidated his party's power base and is
expected to stimulate further foreign investment.Foreign institutional investor flows into 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
for the deployment of long-term capital, the kind that sovereign wealth funds are ideally suited to provide," said Ravi Menon, chief
executive officer of HSBC Asset Management India.THE NEW CHINAThe attention sovereign funds are giving India is like that they have paid to
China, now clouded by a trade war with the United States, said a banker specialising in institutional investors
In the public markets, funds were focused on public equity and fixed income, he said
In the private market, momentum is also building.Private equity deal activity in India surged to $19 billion in 2018, the highest level in
at least a decade, according to PitchBook data
Sovereign wealth funds and pension funds participated in about two-thirds of that amount.Among recent deals, Singapore's GIC sovereign
wealth fund and the Abu Dhabi Investment Authority (ADIA) this month agreed to make a further investment of $495 million in renewable energy
firm Greenko Energy Holdings, which has wind, solar and hydro projects.India is widening its use of solar and wind energy to help reduce its
reliance on fossil fuels.In April, ADIA and National Investment - Infrastructure Fund (NIIF) agreed to buy a 49 per cent stake in the
airport unit of Indian conglomerate GVK Power - Infrastructure.Another wealth fund is in talks on an infrastructure investment, while
Canadian pension funds are seeking similar deals, said a source familiar with the matter.Canada Pension Plan Investment Board and GIC
earlier this year 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, which has been investing in equities and fixed income for years, has broadened its focus to
include asset classes such as infrastructure, real estate and private equities, said people familiar with ADIA's thinking.Its increased
interest in India is driven by the country's strong growth potential, positive demographics and continued economic development, the people
economic and trade ties.REFORM PUSHRegulatory reforms are also bolstering sentiment and drawing in wealth funds.Fund managers were from this
year licensed to manage foreigners' portfolio holdings in the country, where previously such assets had to be managed outside India.Prashant
Khemka, founder of White Oak Capital Management which advises London-listed Ashoka India Equity Investment Trust, said that change had
helped kick-start the onshore fund management industry for foreign-sourced funds."This could be looked back on as an inflection point in the
growth of the Indian fund management business," said Khemka, one of four fund managers to gain such an approval so far
Institutional names, including sovereign wealth funds and pension funds, account for around two-thirds of his clients.Bankruptcy resolution
rules introduced in 2016 helped pave the way for ADIA's $500 million investment earlier this year in a distressed debt fund.The investment
was seen as an effort to launch a secondary market in mountain of distressed debt and help ease the burden on local banks.But some say more
reforms are needed.A source close to several wealth and pension funds said many would like to see the government further overhaul tax rules,
building upon a new goods and services tax that is credited with helping cut red tape, and undertake land and labour reforms.
