More foreign funds rush in

Mirae Asset, Credit Suisse to set up AMCs; EM Capital launches two India-specific funds.

Foreign investors are not tired yet of chasing the India growth story.

Korean financial services firm Mirae Asset and Swiss financial house Credit Suisse on Tuesday announced plans to set up asset management business in India and US-registered EM Capital Management LLC announced launch of two India-specific funds, each having over $200 million corpus. The two funds will invest in Indian capital markets and the private equity sector, respectively.

Yet another entity, Kuvera Capital, a UK-based hedge fund, is expected to start investments in the Indian stock markets, sooner than later. All these announcements were made on Tuesday in Mumbai, on the first-day of the 3-day `Funds World - India 2006' conference.

The EM Capital India Discovery Fund will be different from other foreign institutional investors (FIIs) in its India strategy. "We will invest only in mid-cap and large small caps listed on Indian capital markets," said its chief executive officer Seth R Freeman.

Significantly, the near-peak levels in benchmark stock indices in India is not deterring these investors. "India, I presume, is different from other countries. India can afford to have a price to earnings ratio of 16.5 (one-year forward) as this was backed by a 20 per cent growth in corporate earnings and 8-9 per cent growth in the economy," said Brad Durham of Emerging Portfolio Fund Research, which tracks foreign portfolio investments.

Korea's Mirae Asset, which is into broking to insurance and asset management, planned to enter the asset management business in India, its spokesman told Business Standard.

Mirae Asset, which has already $800 million invested in the Indian equities through its Singapore office, is expected to raise another $200 million from Korean investors for investments in Indian stocks.

"We raised $800 million from Korean about 18 months back for Indian equities. We are bullish of India," the spokesman said.

R E (Sandy) Shipton, head of asset management at Dubai International Financial Centre (DIFC), said Kuvera Capital, an hedge fund promoted by UK and Indian investors, has set up operations in DIFC for operations in the Indian equity markets.

Durham of EPFC said the growing flow of funds into India was mainly owing to the realisation that the country's economy was fuelled more by domestic demand, rather than exports.

"In the third quarter (July-September), there was an outflow of funds from all emerging markets, except India. During the quarter, India saw an inflow of $ 600 million," he said.