That looks set to change significantly given the spate of announcements in the last few weeks. Wanda, China’s largest commercial real estate developer, announced investment worth $10 billion in Haryana. SAIC Motor, China’s largest car-maker, proposes to buy GM’s Gujarat facility. About 100 small and medium Chinese enterprises have promised investments worth $1 billion.
In the start-up space, Chinese companies are no more restricted to proposals, but have been making aggressive and widespread investments. The new year began with China’s online travel company Ctrip picking up a strategic stake in Makemytrip and Baidu unveiling discussions with multiple Indian internet startups for investments. This comes in the backdrop of Alibaba’s high profile investments in Snapdeal and Paytm last year. Another Chinese internet giant Tencent Holdings started investing when it took a wager on Bangalore-based healthcare startup Practo last year.
“Chinese internet companies have recognized the big potential in India’s digital startups where there are similarities in learning curves and experiences,” Frank Hancock, Managing Director, Advisory, Barclays said. He pointed out that the broader FDI investments have pivoted towards the east with Japan competing with the US and the UK among the top three sources of capital. “In that context, the incremental Chinese private investments are important from a signaling perspective,” Hancock said.
A recent Credit Suisse report highlighted that India’s internet and e-commerce journey bears close similarity with that of China, with a lag of 8-10 years. “The presence of such investors on the boards of investee companies enables access to insightful market advice and winning business models,” said Anup Vikal, CFO, Snapdeal, which has attracted investments from Alibaba, Taiwan’s Foxconn and Japanese telecoms & internet giant Softbank.
Besides the strategic investors, Hillhouse Capital, one of the largest China-based investment funds, picked up a stake in online classifieds player Cardekho last year, and took positions in the domestic public markets. More significant, though little known, are the investments by State Administration of Foreign Exchange (SAFE), a fully-owned subsidiary of People’s Bank of China, in some of India’s pedigree large cap stocks. SAFE, entrusted with managing China’s estimated $3.5 trillion foreign reserves, started taking positions in Indian public equities at least two quarters back, several top bankers in Mumbai said in recent conversations.
Between January 1, 2015 and January 22 this year, investors from Asia chose 48 Indian startups to provide financial banking. The 22 companies, from countries including Japan, China, South Korea, Taiwan, Singapore and Malaysia, participated in funding rounds worth $3.4 billion in this period. Chinese companies Alibaba, Tencent, Ctrip, Didi Kuaidi, Hillhouse Capital and Tybourne (Hong Kong) were significant investors.
Source: The Times of India