Abu Dhabi Investment Authority (ADIA), the world’s second largest sovereign wealth fund, is set to expand its India presence by hiring a new country head and eventually setting up an office here, two people aware of the development said.
ADIA, which manages assets worth $792 billion (about Rs50.3 trillion), has mandated global recruitment firm Egon Zehnder to find a head for its Indian operations, the first of the two people said on condition of anonymity, adding discussions are on with a handful of private equity veterans and infrastructure specialists.
“First priority is to hire a head for Indian operations and eventually a team may be set up,” said the second person. At present, ADIA has only one international representative office in Hong Kong, with the rest of the organization based in Abu Dhabi. Owned by the Emirate of Abu Dhabi, ADIA already has a wide exposure in India in sectors such as infrastructure, real estate and banking, financial services and insurance.
An ADIA spokesperson declined to comment while an email sent to Egon Zehnder was not answered.
ADIA recently committed $1 billion in the government’s National Investment and Infrastructure Fund’s Master Fund. In infrastructure, ADIA owns minority stakes in Indian renewable energy producer ReNew Power Ventures Pvt. Ltd, with an investment of $200 million, and clean energy company Greenko Energy Holdings, with an investment of $230 million. In November, ADIA had acquired a minority stake in Cube Highways and Infrastructure Pte Ltd, a road platform formed by I Squared Capital and World Bank’s International Finance Corp.
In December, ADIA had acquired a minority stake in KKR India Financial Services Pvt. Ltd, an alternative credit business of global private equity leader KKR & Co. in India, for an undisclosed amount. ADIA also owns a minority stake in Reliance Nippon Life Asset Management Ltd, India’s third largest mutual fund manager. Other investments by ADIA in India include Security and Intelligence Services (India) Ltd and securities depository firm Central Depository Services (India) Ltd. In real estate, ADIA has made a $200 million investment in Kotak’s realty fund.
“India is now one of the most attractive investment destinations globally. As a result, sovereign funds are investing in setting up their own offices to create a stronghold in the region unlike the past when they were fine with India exposure through other PE (private equity) firms,” said Anshul Lodha, director at recruitment agency Michael Page India.
If the plan materializes, ADIA will become the first sovereign fund of the oil-rich West Asian governments to set up an office in India. Though other sovereign funds like the Qatar Investment Authority (QIA) and the Kuwait Investment Authority (KIA) are active in India, none of them have a physical presence in the country.
KIA, which currently has $592 billion worth of assets under management, has been investing as a limited partner in India through private equity funds such as Multiples Alternate Asset Management Pvt. Ltd. QIA, which currently manages $256 billion of assets, has also done a couple of deals in India.
In the past couple of years, sovereign wealth funds and pension funds have stepped up their investments in India and become the largest investors as compared to the typical private equity funds in the US and Europe.
Toronto-based pension fund CPPIB had opened an India office in 2015, and had a total India exposure of Rs22,560 crore (around $4 billion) by 31 March 2017.
A rival fund Caisse de Dépôt et Placement du Québec, the second largest pension fund in Canada, has made investments worth more than $3 billion in India since it opened an office in the country in March 2016 by hiring Anita Marangoly George as managing director, South Asia from International Finance Corp.
“Strong global footprint, huge capital pool, long term investment view, focus on human capital, low cost of capital and long term commitment to India are some of the major reasons why veterans are heading to sovereign funds,” Lodha added.