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May 01, 2007

More Middle East money flowing to India

Economic Times article on how more and more middle east based banks and financial institutions are investing in India.
Corporate India will have a new set of deep-pocket investors eyeing investments in both equity as well as debt in India. With oil prices on a high for quite sometime now, investors from the Middle East are increasingly turning their focus on countries like India. Already Rana Talwar’s Sabre Capital, along with Abraaj Capital, has set up a $300-million fund to invest in India.

Now, BankMuscat, the largest bank in Oman, is looking at a whole lot of initiatives, including setting up a private equity fund, an Islamic fund which is Shariah-compliant and would also look at helping Indian corporates to raise money through Sukuk — Islamic bonds.

Till now, a host of small Shariah-compliant funds from the UAE and Saudi Arabia have invested in the Indian markets. These funds do not invest in liquor, tobacco and banking stocks. Also, these funds will have to look at how companies are leveraged as high debt-equity ratio may not be acceptable. Many of the smaller funds have been investing in oil stocks. However, the entry of larger funds could change the dynamics and could also bring in more investments.

Arun Natarajan is the Founder & CEO of Venture Intelligence, the leading provider of information and networking services to the private equity and venture capital ecosystem in India. View free samples of Venture Intelligence newsletters and reports.