Dubai venture firm targets India’s health and education sectors

Abhishek Sharma, chief executive of Foundation Holdings.

DUBAI: Dubai-based global investment firm Foundation Holdings will invest millions of dollars in India as wealthy investors and companies in the Gulf tap into the increasingly lucrative emerging market.
The multi-family investment firm plans to spend $275 million in India’s health care, education and consumer sectors. This is around half the company’s total planned investment of $550 million globally over the next five years, according to chief executive Abhishek Sharma.
Low interest rates and easy access to capital pushed the disclosed deal value in private equities in India to $24.4 billion in 2017, up from $19.3 billion in 2015 and $15.4 billion in 2016, according to a report from research company Venture Intelligence released in December. Health care was among the top five sectors, attracting investment of $1.3 billion, up 10 percent from the previous year.
“These industries are continuously witnessing demand and have strong government backing not only in India but also across the world,” Sharma said.
Foundation Holdings’ investors are mainly from the UAE and India, with family businesses and family offices the main backers.
“These sectors have a vast potential because India is consumer-driven,” said Gaurang Shah, head investment strategist at Geojit Financial Services in Mumbai. “(But) the working capital requirement is huge because (new entrants) need to penetrate new geographies and there is a long gestation period to break into profitability.”
Wealthy individuals and financial institutions in the Gulf have expanded their portfolios in India as ties between the two regions deepen.
High-profile visits have helped to cement the relationship. India’s Prime Minister Narendra Modi toured Saudi Arabia in 2016 and Sheikh Mohammed Bin Zayed Al-Nahyan, crown prince of Abu Dhabi, visited India in January this year.
In September last year, Dubai-based private equity firm Abraaj Group announced it would develop a wind-power platform in India in partnership with French gas and power company Engie. India’s ambitious renewable energy program has a target of 175 gigawatts of operational renewable energy capacity by March 2022.
Abraaj and Engie said their wind-power projects could account for 1 gigawatts of power.
In December, the Abu Dhabi Investment Authority (Adia) and KKR India Financial Services (KIFS) signed a deal that made Adia a “significant minority shareholder” in KIFS, which runs an alternative credit business in India.
Foundation Holdings will invest in companies to prepare them for an IPO or find them a home on the FTSE 100, such as Al Noor Hospitals, or on the Dubai Financial Market, such as Amanat Holdings.
The firm’s latest investment, Dubai-based Right Health, was formed through the acquisition and integration of 31 medical and health-service providers to an IPO.
Annual foreign direct investment from the Gulf to India was $1.4 billion in 2016, a five-year growth rate of 41.2 percent, a report from Alpen Capital said last year. Total annual investment inflow to India was $44.4 billion in 2016, according to the United Nations Conference on Trade and Development.
However, India has not always been a happy hunting ground for investors from the Gulf. The UAE telecom major Etisalat wrote off $820 million in impairment charges in 2012.
“Investing in India comes with its set of challenges, like other countries,” Sharma said. “Some of these include certain state-level legislations, registration of documents and data privacy matters.”
He said Narendra Modi has done “a great job” in encouraging bilateral relations between the Gulf and India.