As Delhi keeps pension reforms waiting, its global heavyweights come calling

At a time when the Government is shying away from crucial pension reforms, some of the world’s largest pension and institutional fund m...

At a time when the Government is shying away from crucial pension reforms, some of the world’s largest pension and institutional fund managers, managing over 5 trillion dollars in assets, have landed in New Delhi to spend this week studying the phenomenon that is India.

Their intent: understand and appreciate the gallop of the Indian economy, the state of play in important sectors, the bottlenecks that could be future opportunities like infrastructure.

Close to 60 representatives from 50 institutions, including private equity investors and state treasuries, largely from the US and some from the Netherlands, Switzerland, Canada and UAE arrived here yesterday under a common platform called the World Pension Forum. These influential investors—among them is California State Teachers Retirement System, the fourth largest in the world—kicked off their Indian “education” with a session on “Creating a Framework Of Investments in India” with panelists such as Ashwini Gupta of Honeywell Industries and Anil Shrikhande of Boeing.

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They later discussed India’s energy scenario with TERI’s Dr R K Pachauri, Power Trading Corporation CMD T N Thakur and Vikram Mehta from the Shell Group of Industries. Tomorrow, they will be familiarising themselves with India’s foreign policy and corporate governance standards before meeting the US ambassador to India, Robert Mulford. Although this is only a “recce” tour for the investors, the seriousness of their interest in India is reflected in the label they have put on this series of meetings. They have called it “Pension Passage to India”. If only the Left parties could share their optimism about the Indian stockmarket as an avenue for pension fund investments. Be that as it may, their arrival is a positive omen for the Indian markets and economy.

	Look who’s here

			• Capital Guardian Trust Company (assets $300 bn) • GE Asset Management ($188 bn) • California State Teachers Retirement System ($103.27 bn) • Bank Of New York ($101.8 bn) • Oregon State Treasury ($66 bn) • Virginia Retirement System ($36.2 bn) • Los Angeles County Employees Retirement Association ($26.46 bn)

Foreign fund inflows on Indian bourses were largely speculative and short term in nature till 2004. Only last year, when the world’s largest pension fund Calpers and various other long-term money managers entered the market, did the profile of the “foreign investor in India” begin to “diversify”. Even if a few of those visiting, put in a fraction of their trillions into the Indian markets, the long term impact would be that Indian markets would be less vulnerable to one set of investors exiting in a hurry. Consider the composition of the visiting clique—over 30 institutional and private equity funds, over 20 US university and state pension funds and a few US state treasuries. In the absence of a domestic equity cult, this could lend Dalal Street a vital dose of “stability”.

A few of the visitors are, in fact, already betting big on India. Khaled Al Muhairy, for instance, is the CEO of the first independent private equity fund of funds focused on India. The Evolvence India Fund, that Muhairy manages, is a Mauritius-domiciled offshore fund of funds investing in private equity, Real Estate and Infrastructure development space.

The group will be heading to Bangalore on Wednesday. While it’s heartening that Indian infrastructure that’s crying for investments is on the group’s agenda, their arrival experience at Bangalore airport could be a turning point in their “education” process.