'We Have Doubled Our Exposures To India'

'Expect India to keep doing well irrespective of geopolitics.'

Singapore's sovereign wealth fund GIC, which started investing in India over 30 years ago, marks 15 years of its on-ground presence in the country.

Lim Chow Kiat, CEO, and Pankaj Sood, head of direct investments, India & Africa, private equity and head of India office, discuss their investment approach, sectoral bets, and why they see India as a long-term growth market despite the current market meltdown in an interaction with Jaden Mathew Paul and Dev Chatterjee/Business Standard in Mumbai.

Do you see the current geopolitical climate, including the US president's warnings to India on reciprocal tariffs as a challenge to the Indian economy?

Lim: There is a significant degree of uncertainty, given all these changes are happening geopolitically.

Every country is looking at this very closely. But I would say geopolitically, India enjoys a good position.

India is able to have this sphere of independence. On that front, we are quite positive.

In fact, we think India will continue to attract more investment as companies diversify their supply chain.

I'm hopeful that more foreign direct investment and other investments would happen.

This will help create more jobs and build up the middle class in India.

How much has GIC invested in India so far?

Lim: We don't go down to that sort of detail. In the last five years, we have doubled our exposures to India.

In terms of numbers, in financial services alone, including banks, non-banking financial companies, insurance and asset management, our investment is around $20 billion as of today.

That's a sector that is very in line with the Indian story of growth, expanding middle class, and digitalisation.

GIC has also been very active in real estate and infrastructure, in the consumer area, in technology and healthcare.

How do India's growth challenges compare to those of China?

Lim: The demographics, reforms, use of technology and in recent years, large investments into physical infrastructure are really good stories that we like about India.

The challenges remain in the creation of jobs as from jobs, you get income and from income, you get middle class spending.

From middle class spending, you get profits. The reform measures are working and I could see more industries expanding.

The other challenge that India has is the dependency on oil import that over time has been a challenge.

But again we have seen policy measures and entrepreneurs working hard to sort of reduce that dependency by investing in green energy.

Will GIC's investments in 2025 exceed those in 2024, or do you anticipate a slowdown?
Given the market downturn over the past six months and the decline in foreign institutional investor flows, how do you see the investment landscape shaping up?

Lim: I would say valuation has improved in terms of deploying new money into the market. This market gyration, it's not all a bad thing.

It creates more opportunities for deals to happen and we are seeing a good pipeline of deals.

Sood: We have different teams looking at real estate infrastructure, health care, and financial services, among others.

Wherever we think there is a better opportunity from a valuation cycle standpoint, we'd rather invest more than step back.

Similarly, at any point in time, there are different sectors which are actually performing better and there are some sectors which pull back.

We look for deployment opportunities in long-term sectors where valuations are more reasonable.

Can we expect GIC to maintain the same investment momentum over the next five years and investments doubling within that time frame?

Lim: Definitely we see strong momentum. I definitely would put that kind of ballpark.

Sood: One has to take into account the potential of the market. We are expecting India to keep doing well, irrespective of the geopolitics as the domestic theme is very strong.

Net capital outflows from FDI and FII standpoint have been marginally positive to negative whereas domestic flows are fairly strong.

The Indian market has become more self-dependent from a capital point of view as well. Certain long-term investors like us could benefit from that.

Are you concerned about the slowdown in consumption, particularly in urban markets?

Sood: If we were very short term, we would definitely behave differently. But we think that long-term potential is still intact.

I think these are times when you should be a bit more active and follow the herd. We are not saying we want to be contrarian.

We are a long-term investor, and hence, our ability to weather some of these cycles in the short term allows us to be a bit more robust in our approach.

Are you considering investments in the Indian IPO market?

Sood: We have the entire setup in place to address such opportunities. In fact, we now have an on-the-ground public markets team, which was previously operating out of Singapore.

With more space in our new office, it has physically relocated here, demonstrating commitment to the Indian listed space.

Beyond this, we also have a large team in Singapore that evaluates listed investments across the entire life cycle -- pre-IPO, IPO, anchor investments in IPOs, post-IPO trading, block deals, and more.

We have a team in San Francisco which is looking into startup ecosystems. Now, we have a team based here which looks into startups.

India has a long-term capital gains tax, which some investors consider a hurdle for foreign investors. How do you view this?

Sood: Taxes and regulations are part of the landscape for anyone investing in a country.

If policies change, we just need to ensure that we understand that well and incorporate it in our equation of risk-reward and pricing, among other things.

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Feature Presentation: Rajesh Alva/Rediff.com