BENGALURU: India will be a major beneficiary of a new $4.4 billion fund established by the Chinese government under its ‘One belt, one road’ initiative.
The China Ocean Strategic Industry Investment Fund (COSIIF) launched last month will be managed by Dubai-based private equity firm Elyseum Capital Partners.
Upmanyu Misra, managing partner in Elyseum, said he intends to allocate about 15% of the fund corpus to India. The targeted sectors are technology, media, infrastructure, healthcare, maritime, and public sector banks.
Under the ‘One belt, one road’ initiative, China is seeking an infrastructure build-out through a route that runs through the continents of Asia, Europe and Africa, connecting vibrant East Asia at one end with developed Europe at the other. The idea is to dramatically increase trade among these regions. In 2014, China established the Silk Road Fund, and a year later, the Asian Infrastructure Investment Bank, with an initial capital of $100 billion. But both these are government-led. The idea of COSIIF is to involve private parties in fund management to bring more efficiencies in implementation, though its funds will come wholly from Chinese government-owned entities.
“This was done to bring in highly specialized finance professionals to manage the funds. This will ensure requisite due diligence and financial viability to the investments,” said Misra, who was previously a JP Morgan investment banker based in New York. The executive committee of the fund will be headed by Li Yu, China’s head of finance council, who reports to Chinese premier Li Keqiang.
Chinese investors have been looking to benefit from the Make in India and Startup India campaigns.
However, there have been irritants that the fund hopes to solve. Misra noted instances where investors filed tenders for infrastructure projects, but didn’t even get a courtesy email from the government bodies running these tenders once those projects were awarded to other parties.
He said COSIIF investment discussions and operational efforts have been launched in India. Misra has been holding meetings with political leaders, government officials, and financial institutions.
“India is a very important market for China. We will be focussed on the financials and enable best-in- class technology,” said Misra, adding that the first investment will be announced as soon as early next year. “The whole process will be run by financial institutions and we have been in discussions with JP Morgan and Bank of America,” Misra said.
He said the fund has been in discussions with a top logistics provider, a very high tech player. “In the startup space, we are looking to deploy Rs 1,500-2,000 crore. We would like to take a significant minority stake (when we invest),” Misra said.
Though the initial capital under Elyseum’s management is $4.4 billion, COSIIF is allowed to make further investment calls of up to $10 billion (Rs 68,000 crore) over a period of five years. China has allocated $1.5 trillion to the `One belt, one road’ initiative. Of that, $15 billion or Rs 1 lakh crore is what it expects to invest in India.