Monday, November 27, 2006

>Japan Investment in Indian equities to double

Investments by Japanese funds into the Indian equity markets are expected to double to $ 10 billion in the next 2-3 years, feels a senior executive of Japan’s Shinsei Bank.

“There is good potential for investors to grow their assets in India,” Toru Irokawa, Co-Head of Asset Management Division, Shinsei Bank, told Business Standard. “We expect the investments by Japanese funds in India to double in next 2-3 years,” he added.

Buoyed by rapid expansion of Indian economy coupled by robust corporate earnings, about 10 India-specific funds from Japan have invested about $ 5 billion in the domestic markets.

Shinsei Bank owns a ‘decent percentage’ of the $ 1 billion ‘India Equity Fund’ managed by HSBC Bank. The bank has now tied up with India’s largest mutual fund UTI Asset Management Company to raise another $ 300 million in next couple of years from Japanese investors for investments in the Indian stock markets.

“India’s GDP per capita ratio at the moment was similar to Japan in 1960. The numbers show India is at the point of entering the high growth period,” said the Shinsei Bank official.

Other Japanese funds, including Namura and Daiwa, also have presence in India.

Irokowa said that there was significant interest among Japanese investors in India, despite a ‘turbulent period’ in May-June period.

The sharp 30 per cent fall in stock prices during that period also witnessed redemptions from Japanese funds in India. “We feel that the situation is more or less stable now,” he said.

Commenting on its tie-up with UTI AMC, Irokawa said: “Shinsei Bank will distribute India-specific investment funds to be managed/advised by UTI AMC to Japanese general individual investors.”

The offshore fund would come under UTI MF’s overseas subsidiary UTI International, said Ashish Ranawade, Head - Wealth Management Division of UTI AMC. The funds would be managed by the portfolio management services (PMS) division of the fund house, he added.

The proposed UTI-Shinsei Fund will invest in companies operating in high-potential IT, pharma and the infrastructure sectors.

Though it is a diversified fund, we will concentrate on 4-5 sectors for investments,” said Ranawade.

Sanjay Sachdev, Country manager India & Regional Manager, Shinsei Corporate Advisory Services, said the Japanese bank had big plans for India.

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