MUMBAI: In a definite indication that global investors are betting big on India, assets under custody of sovereign wealth funds in domestic companies jumped by a full 60 percent to touch Rs 4.7 lakh crore in the 12 months period ending April 2024 as against Rs 3 lakh crore in the previous year, according to the latest NSDL data.
The world's largest sovereign funds such as the Government Pension Fund Global of Norway, which with $1.4 trillion in assets under custody is the world's largest, the Abu Dhabi Investment Authority, the Sama Foreign Holdings of Saudi Arabia, the Canadian Pension Funds, the GIC and Temasek of Singapore, and the Kuwait Investment Authority among others are some of the leading sovereign wealth funds which have been pumping tens of billions into domestic companies/entities/infra assets.
They're increasing their India bet as the country remains the fastest growing large market.
These funds have been homing in on the country on the back of the tax exemptions they have begun to get in recent years along with relaxation in the KYC norms which has substantially reduced the compliance cost ad time for them.
Total securities/assets owned by sovereign wealth funds in domestic companies/entities/infra assets jumped by almost 60 percent to Rs 4.7 lakh crore in the one-year ending April 2024, show the data from the National Securities Depository (NSDL). In the previous 12 months period ending April 2023, assets under custody of these funds was Rs 3 lakh crore, according to the same data.
Nify companies' ownership falls
In contrast, the assets under custody of foreign portfolio investors (FPIs) jumped by close to 40 percent during 2024 to reach Rs 69.5 lakh crore, NSDL data show. However, their ownership in the Nifty companies fell to an 11-year low of 17.68% as of end March, down 51 bps from 18.19% as of end December 2023, according to data from Prime Database, even as the share of domestic institutional investors gained to 16.05% from 15.96% during this period.
This can be attributed to the better ranking in ease of doing business which the present government has been pushing. In the past five years alone, the Centre has eased the compliance process for such funds and has also provided special tax exemptions for certain sovereign wealth funds such as the Abu Dhabi Investment Authority. Another factor that's attracting them to the domestic shores is political stability and higher economic growth.
The NSDL data shows that the sovereign wealth funds of Singapore or the government of Singapore's biggest stock market investment are in companies like Reliance Industries where its funds own 1.5% stake worth about Rs 30,000 crore at current market prices. It also owns 2.34% or shares worth around Rs 25,000 crore in HDFC Bank.
The Abu Dhabi Investment Authority on the other hand has significant investments in an array of domestic companies including IPCA Laboratories, Welspun and Avas Financiers amongst others. It is also a major investor in the country’s infrastructure sector.
And when it comes to the world's largest fund -- the Norwegian Pension Fund -- it owns shares in dozens of publicly traded domestic companies such as Axis Bank, Bajaj Auto and Eicher Motors among others, shows the data.
