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Investors have ramped up their India investments to more than $20B in the last few years.

Canada’s biggest asset managers, never afraid to push the investing envelope, have been loading up on Indian assets — big time.

Investors including Brookfield Asset Management Inc. and Canada Pension Plan Investment Board have signed deals for mobile-phone towers, office properties, a stake in an airport and distressed debt, betting that scale outweighs risk in the world’s fastest growing major economy.

After record deals last year, the Canadians have ramped up their India investments to more than $20 billion, the bulk of it in the last few years, according to calculations compiled by Bloomberg.

“It is a very important, critical market for us,” Suyi Kim, Asia head for Canada Pension, said in an interview in Mumbai, citing India’s rapidly developing private-equity scene and a market big enough to absorb investments from the $298 billion fund. The Toronto-based manager bought a 10.3-per-cent stake in telecom-tower owner Bharti Infratel Ltd. with KKR & Co. in March for almost $1.4 billion, adding to investments of about $3.5 billion in the country as of December.

The Canadian funds have been lured by the size of the reward. They’re investing in a country that’s growing at more than 7 per cent and will have the world’s largest workforce by 2030. India’s benchmark stock index have surged to a record, outpacing the Canadian market by almost three times since Indian Prime Minister Narendra Modi took office and pledged to overhaul the economy to unleash the power of 1.3 billion people. The latest reform, a goods and services tax designed to unify the market and make doing business easier, is set to go into effect on July 1.

On Thursday, both India’s benchmark indexes touched record highs and are poised for their longest winning streak in almost three months. But India also has major challenges, including $246 billion of distressed debt, which at about 17 per cent of total loans, amounts to the world’s worst bad-loan ratio, and is slowing credit growth. Weak private investment, lacklustre productivity and red tape also threaten to hurt the $2.7-trillion economy.

Soured loans are where two big Canadian investors see opportunity. Caisse de dépôt et placement du Québec, which manages assets of about $270 billion for Quebec’s retirees, has a 20-per-cent equity stake in Edelweiss Asset Reconstruction Co., India’s largest buyer of delinquent debt. The Caisse said in October it is targeting $820 million to $960 million in stressed assets and specialized corporate credit in India over four years.

Brookfield also signed a memorandum of understanding in July with State Bank of India to set up a joint venture to invest in stressed assets, with the Canadian firm planning to contribute about $1.4 billion into the partnership.

Anita George, managing director of South Asia for the Caisse praised the government’s attempts to get credit moving again. The government last week gave the Reserve Bank of India, the nation’s central bank and financial regulator, new powers to spur lenders and borrowers to take writedowns.

Still, George is under no illusions about a country that can throw investors a “googly,” using the cricket term for a ball that comes at you from an unexpected quarter. That’s why the Montreal-based fund invests as a minority partner, she said.

“To be very frank, often we have a lot to learn,” George said in an interview in Mumbai. Indian companies don’t like to give up control so it works out for both sides, though the Caisse is very involved in governance and insists on board seats, she said.

A representative for Brookfield said the Toronto-based company declined to comment on its India push. The company agreed to a couple of deals in October that more than doubled its Indian assets to $6.8 billion. It bought mobile-tower assets for an upfront payment of about $2.2 billion in the largest private-equity deal in the country to date and commercial property for about $1 billion.

It’s not the first time Canada’s asset managers have broken new investing ground in a concerted way. After the government freed them up in the 1990s to move beyond stocks and bonds, they turned to private equity.

Canadians also bought a record $5.3 billion in property in Manhattan in the decade through 2015, more than any other foreign country. More recently, the pension funds have been increasing leverage and setting up in-house hedge funds to bolster returns in a world where bond yields are paltry and the ranks of their retirees are swelling.

India has always been viewed as high-risk, high-reward for global investors, said pension expert Malcolm Hamilton, a fellow at Toronto-based C.D. Howe Institute, an economic research firm. “Modi’s government gives investors greater confidence.”

So far, pension funds have been well rewarded taking that higher risk, though the ability to do so will diminish as their pensioners age, Hamilton said. “If they are lucky, they will succeed until interest rates move up and they can afford to de-risk.”

Apart from the demographics, the scale of the country’s entrepreneurial class is also a major draw, George said.

“I’ve seen so many companies that have started as startups and have actually been able to scale up, and that to me is an amazing story.” Those have included Azure Power Global Ltd., in which the Caisse has a stake of about 21 per cent.

“It’s a great story because he’s now at 1,000 megawatts, he’s the largest pure-solar play in India and he’s listed on the New York Stock Exchange,” she said.

Telecom towers are another focus area for Canadian acquirers as a battle for market share is expected to prompt carriers to boost investments to offer faster speeds and more capacity, boosting demand for towers.

Brookfield and Canada Pension are both said to be weighing a bid for a bigger prize — Indus Towers Ltd. — after their initial forays in the sector. A takeover could value India’s largest wireless-infrastructure company at more than $16.4 billion, according to people with knowledge of the matter.

Fairfax Financial Holdings Ltd. has been among the most active in India, through its controlling stake in Thomas Cook (India) Ltd. and Fairfax India Holdings Corp. Fairfax has invested about $6.8 billion in the country, agreeing deals for a stake in a Bangalore airport and a financial services company.

While a rise in Hindu nationalism may be one of the political issues investors may be watching, George said she has faith in Indians’ ability to push back if extremes surface.

“It’s the largest democracy, and that aspect is very important,” she said. “Chaotic but democratic.”

https://www.thestar.com/business/economy/2017/05/12/canadian-investors-bank-on-indias-growing-economy.html

Xiaomi puts the focus on India with plans to open 100 retail stores

Xiaomi is increasing its office retail presence in China as bids to gain ground stolen by rivals in its homeland, and now it is making that very same push in its second largest market, India.

The Chinese company, which is valued at $45 billion, suffered a tough time last year as sales growth slowed — Xiaomi, notably, didn’t go public with sales figures for 2016 — but India has been a bright spot. It passed $1 billion in revenue for the first time in the country last year, and it ended 2016 as India’s second highest selling smartphone maker behind only Samsung, according to analyst firm Canalys.

Now it is doubling down on the country by introducing its ‘Mi Home’ stores, starting with a debut space in Bengaluru which will open in just over a week. The plan is to expand the initiative to reach 100 stores over the next two years, Xiaomi’s India head Manu Jain said in a tweet.

Jain told Economics Times that Xiaomi is aiming to stock all products available in India but, in the off chance that it is out, customers will be able to pick up a code that allows them to buy their desired device online. The stores will also show off products from China before their local launch in India.

Initially, Xiaomi is somewhat constrained by Indian regulations on overseas firms operating brick and mortar retails stores. That means its first stores will be run by a partner, although Xiaomi said it has applied for the relevant license to take over. Apple is among others that is in the same boat. The U.S. giant is waiting on permission to bring the Apple Store to Indian soil, a move that would massively increase its sales presence. While CEO Tim Cook has said that India-based sales are growing at record levels, Apple is estimated to have shipped just 2.5 million iPhones to the country last year. For comparison, it sold 50.8 million iPhones in the most recent quarter alone.

https://techcrunch.com/2017/05/12/xiaomi-mi-home-store-india/