As the economic fallout of the coronavirus pandemic makes business valuations attractive, Asia's richest banker said, overseas investors should look to invest in Indian digital to consumer sector businesses now. "I have always believed that when things look more complicated, you have to invest in India," said Uday Kotak, managing director of Kotak Mahindra Bank Ltd. said at the Bloomberg India Economic Summit Thursday in a conversation with David Rubenstein, the co-founder of Carlye Group Inc. "That's the best time to make it work with your money." Similar to the early days of China's digital boom, with half a billion Internet users and rising, overseas investors have poured money into Indian companies in sectors from e-commerce to digital payments. The value of the industry has only increased this year as the Covid-19 pandemic forced the South Asian nation in late March to implement the largest lockdown in the world.
Mukesh Ambani, the wealthiest man in Asia, earned more than $20 billion this year, selling 33% of his Jio Platforms Ltd. technology company to investors such as Facebook Inc. and Google. His Reliance Retail Projects Ltd. has embarked on a spree of raising its own capital, mopping up $5.1 billion in the past two months from private equity and sovereign wealth funds. "Digital, e-commerce, technology, pharmaceuticals, and customers are now the right sectors to invest in India,” Kotak founder, Kotak Mahindra Bank Ltd. said. There is also a surge in spending in the health care industry. In July, KKR & Co. said it would gain a majority interest in J.B. Chemicals and Pharmaceuticals Ltd., while Carlyle Group bought a 20 percent stake in the pharmaceutical company of Indian billionaire Ajay Piramal.
"India and China are probably going to be the best place to invest in the world outside the United States for the next ten years or so," Rubenstein said. "India didn't have as much outside capital as China did, but I think that will change over the next ten years, and India is increasingly seen as an interesting place to invest in foreign capital."
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The strongest private banks in the nation have skirted the shock waves that in recent years have hit state-owned banks and shadow lenders, leaving those sectors grappling with bad debt under the mountains. In contrast to their state sector peers, private sector banks have been gaining market share at a rapid pace with faster loan growth, which have resisted rising new loans due to a legacy of bad debt. Kotak said the banking sector is "ripe for major structural reform." According to Kotak, private sector banks' market share in India will increase to around 50 percent from the current 35 percent over the next decade. According to RBI data, private banks ' lending books grew at an annual 11.3 percent as of March, more than three times the rate of state-controlled banks. Their bad-loan ratios could increase from the 4.2 percent reported in March, which was well below the 11.3 percent for state lenders, if asset quality continues to deteriorate.