Wednesday, June 28, 2006

Arab investors may turn to India stocks

To tap the huge liquidity, Sabre Capital has announced the setting up of a $250-million fund. The fund will be set up in partnership with Abraajcapital of Dubai.

Mumbai , March 22
After the US, European and Japanese investors, it is now the turn of oil-rich Arab investors to create a stir in the domestic stock markets. With stock markets in Dubai, Qatar, Bahrain and Saudi Arabia turning bearishearly this month, bullish Indian markets meant that the time was `ideal` for these rich investors to take a call on the India-story, say experts. Leading foreign funds have initiated talks to float India-specific funds in the Gulf region that adheres to Islamic or Sharia'h Law, they said. Already, the Bahrain-based TAIB Bank manages two funds - Everest Fund (minimum subscription of $10,000) and another Mauritius-registered fund - worth a total of Rs 1,000 crore investments in the Indian bourses. "These are open-ended funds; we can raise more through these two funds," said an official.

Now, `India Profit Sharing Fund', another open-ended Sharia'h compliant fund with an exclusive focus on India is on. The fund, which will be managed by a domestic fund house, is targeted at the oil-rich HNIs in West Asia. This fund is also expected to be a success, courtesy the great Indian growth story doing the rounds across the globe, said an official with the fund. The minimum subscription amount for this fund is $200,000. As Islamic law stipulates, the fund will not invest in companies that sell pork, tobacco or alcohol, or in casinos and most media and entertainment

To tap the huge liquidity in the West Asian region, Mumbai-based Sabre Capital on Tuesday announced the setting up of a $250-million fund in partnership with Dubai-based Abraaj Capital for private equity investments in India. Similarly, during 2005-end, Al-Madina, a Shariah-compliant investment firm backed by Gulf Bank, raised $171 million for investments in the Indian stock markets. "We have just scratched the surface," points out Mr Naresh Kothari, Head, Institutional Equities, Edelweiss
Securities. According to him, the Gulf-based investors, sceptical of Indian equities post the stock market crash of the mid-90s, have started to test the Indian markets again. "Till now, we were seeing NRI money from the Gulf. Now, we will see the real Arab money coming in." Earlier this month, the West Asian stock markets were down - Dubai (35 per cent from February), Qatar (28 per cent), Bahrain (12 per cent) and Saudi Arabia (15 per cent), forcing the Arab investors to look at performing emerging markets, including India.