In a move that could significantly boost investor confidence, several sovereign wealth funds (SWFs) from Japan, UAE, Norway and Canada among others have rekindled their interest in investing in India’s cash starved infrastructure sector, which needs $1 trillion worth of funds in the next four-five years.
“The government is in talks with a few SWFs and they have shown a keen interest to invest in the country and we are hopeful that things would materialise soon,” a government official said on the condition of anonymity.
Though the recent volatility and a depreciating rupee have reduced the attractiveness of the stock market for SWFs, renewed interest of these funds are likely to reverse the trend.
Last week, investment management firm Canada Pension Plan Investment Board (CPPIB) bought 50 lakh shares of private sector lender Kotak Mahindra Bank for a little over Rs. 357 crore.
Besides, other funds including the $236-billion California Public Employees’ Retirement System, the largest public pension fund in US; the Dutch pension fund and Denmark’s LD Pensions are also looking to invest in equity, debt and infrastructure sectors.
The government, which has set a disinvestment target of Rs. 40,000 crore for 2013-14, is also keen on allowing sovereign funds to invest in the process. “This would also help in pushing the entire exercise, which would be the thrust as the government has to meet the fiscal deficit target,” the official added.
The government is also likely to consider treating Abu Dhabi Investment Council and Abu Dhabi Investment Authority as different bodies against the current practice of treating them as a single entity.