Chinese Equity Funds Eye India’s Banking, Insurance, NBFC Sectors

Mumbai: International private equity funds based in China, Hong Kong and Singapore are eyeing investment opportunities in India’s financial sector services as dialogues between the policymakers of two ancient civilizations, and people-to-people relations are currently moving in the right direction, reliable sources said.

“Large six private equity funds and investment firms based in Shanghai, two based in Hong Kong and three from Singapore propose to acquire majority stakes in India’s growing banking, insurance, and NBFC sectors, eyeing lucrative and mutually beneficial business opportunities. It’s India’s strengthening economic fundamentals that attract global equity funds. Several in-principle go ahead on potential deals have already been reached, subject to Indian regulatory approvals and expected to bear fruits in the weeks and months ahead,” a source close to the talks told The Free Press Journal on Tuesday.

“Talks among financial advisors, including two major audit firms, offering acquisition services, transactions and corporate finance are in full swing,” sources said.

Indian banks such as SBI and ICICI have branches in Shanghai. ICBC started banking operations in India, and Bank of China launched its first branch in Mumbai (BKC) in 2019. At present, India is a global hotspot for acquisitions, and during the calendar year, till last week, private equity deals in the country had crossed $7 billion.

Despite imposing anti-dumping duties to tackle cheap imports from China, and various countries, Chinese funds are keen to invest in India’s financial sector. Imposing anti-dumping duty will ensure fair trading practices, and create a level-playing field for domestic producers vis-a-vis and foreign producers and exporters.

China is India’s second largest trading partner today. For the world’s largest populated nations with a combined strength of nearly three billion people, and a combined GDP of nearly $24 trillion, the scope of enhancing bilateral relations is enormous, and sky's the limit. India’s GDP stands at $4.3 trillion today.

“The news on the Indian and Chinese economies are not bad. India-China can reduce the magnitude of pitfalls of world’s fragmentation through dialogues and pacts. All praise to India and China for having enough wisdom and capability to maintain peace in a world of geopolitical tensions, and economic uncertainties. Leaders are for a fair and sustainable solution to pending border issues, if any,” a senior New Delhi-based political analyst and a former ambassador told The Free Press Journal.

From 2015 to 2022, India’s trade with China had crossed $136 billion. Growth in bilateral investment, however, has not kept pace with trading volumes. Dr Reddy’s Lab, Aurobindo Pharma, Aptech, Matrix Pharma, NIIT, Bharat Forge, TCS, Infosys, Wipro, Mahindra Satyam, Essel Packaging, Reliance Industries, Sundaram Fasteners, Mahindra & Mahindra, Tata Sons, etc. have operations in China. Chinese companies Baoshan Iron & Steel, Sinosteel, Sany Heavy Industry, Shougang International, Chongqing Lifan Industry, SinoHydro Corporation, and China Dongfang International have operations in India. Chinese electronic, IT and hardware manufacturing companies, including Huawei Technologies, ZTE, TCL Technology, Haier, etc. have presence in India. Chinese firms involved in EPC projects are Shanghai Electric, Harbin Electric, Dongfang Electric, and Shenyang Electric, and mobile companies Xiaomi, Huawei, Vivo and Oppo have achieved remarkable growth in the Indian mobile handset market.

While both countries have emerged as top investment destinations for the rest of the world, mutual investment flows are yet to catch up. Chinese investment in India in 2021 was estimated at $5.403 billion, and India’s imports from China reached $118.77 billion.