MODI EFFECT: SWFs and Pensions Intensify Direct Investments in India

Source: Sovereign Wealth Fund Transaction Database - June 2016.  Direct data on sovereign wealth funds and public pensions.  Billions USD.

Source: Sovereign Wealth Fund Transaction Database – June 2016. Direct data on sovereign wealth funds and public pensions. Billions USD.

Narendra Modi was sworn in as Prime Minister of India on May 26, 2014. Somewhat stronger private property rights, slightly-loosened regulation and friendlier foreign investment laws have increased the flows of foreign institutional investor capital. Since 2013, direct investments by sovereign funds and public pensions into India have ramped up, according to time-series data from SWFI’s Sovereign Wealth Fund Transaction Database (SWFTD). This data is adding in both sovereign wealth funds and large public pensions (mostly Canadian public investors). In 2006, just US$ 101 million was directly invested into India by public institutional investors. Most capital flowing in before the global financial crisis were private equity investors. In 2012, US$ 1.38 billion was directly invested into India by public institutional investors. By 2015, the number amounted to US$ 5.44 billion.

“Despite a prolonged slowdown in oil prices and turmoil in select emerging markets, long-term public investor capital seems committed to India in an upward steady pace,” commented Michael Maduell, President of SWFI.

Modi’s economic reformist agenda has lessened the historic fears of institutional investors. Increasingly, wealth funds are participating in more investment channels and with higher capital amounts such as being cornerstone investors in IPO deals. [ Content protected for Sovereign Wealth Fund Institute Standard subscribers only. Please subscribe to view content. ]


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