Uday Kotak has been the CEO of Kotak Mahindra Bank for 17 years.
Foreign investors should now look to invest in Indian companies in the digital consumer sector, as the economic fallout from the coronavirus pandemic makes business valuations attractive, Asia’s richest banker said.
“I’ve always believed in investing in India when the going looks tough,” said Uday Kotak, Managing Director of Kotak Mahindra Bank Ltd., in a conversation with David Rubenstein, co-founder of Carlye Group. Inc. at the Bloomberg Indian Economic Summit on Thursday. “This is the best time to put your money to work.”
With half a billion internet users and growing, foreign investors were pumping money into Indian businesses in industries ranging from e-commerce to digital payments – much like the early days of the digital boom Chinese. The importance of the sector has only increased this year as the Covid-19 pandemic pushed the South Asian nation to impose the world‘s largest lockdown in late March.
Asia’s richest man Mukesh Ambani has raised more than $ 20 billion this year, selling 33% of his tech company Jio Platforms Ltd. to investors such as Facebook Inc. and Google. Its Reliance Retail Ventures Ltd. has embarked on its own fundraising frenzy, absorbing $ 5.1 billion in private equity and sovereign wealth funds in the past two months.
The “right sectors” to invest in India now include digital, e-commerce, technology, pharmaceuticals and consumers, said Kotak, founder of Kotak Mahindra Bank Ltd. The healthcare sector is already seeing a sharp increase in investment. KKR & Co. announced in July that it would acquire a controlling stake in J.B. Chemicals and Pharmaceuticals Ltd., while Carlyle Group bought a 20% stake in the pharmaceutical business of Indian billionaire Ajay Piramal.
“The best place to invest in the world outside of the United States over the next ten years will definitely be India and China,” Rubenstein said. “India hasn’t had as much foreign capital as China, but I think that in the next ten years that will change, and India is increasingly seen as an attractive place to invest for foreign capital. . “
Market share
The country’s strongest private banks have avoided the shockwaves that have hit public banks and shadow lenders in recent years, and left these struggling sectors under mountains of bad debt. Private sector banks have gained market share at a rapid pace with faster loan growth compared to their public sector counterparts, which have avoided stepping up new loans due to a legacy of bad debt.
The banking sector is “ripe for significant structural change,” Kotak said. The market share of private sector banks in India will rise to around 50% from the current 35% over the next decade, according to Kotak.
The loan books of private banks grew 11.3% per year in March, more than three times the pace of state-controlled banks, according to RBI data. If asset quality begins to deteriorate, their bad debt ratios could rise from the 4.2% recorded in March, well below the 11.3% of public lenders.
Succession planning
Kotak also addressed questions about the estate. There are no rules at the moment that cap his tenure as head of the Mumbai-based bank, he said, adding that the lender has put in place measures for long-term succession planning. term. At a later stage, and “not in the near future,” he might consider a role of non-executive director of the bank he founded and runs, Kotak said.
The Reserve Bank of India has proposed a 10-year cap for founders of banks who remain full-time CEOs or directors. This could mean that Kotak, 61, must step down from his current role at Kotak Mahindra Bank as early as 2022, on the date the final rules are implemented.
The billionaire banker has been the CEO of the bank for 17 years. Kotak had also reduced its stake from nearly 30% to 26%, settling an unprecedented legal battle with the RBI earlier this year.
Within the bank, “we are 26% shareholders as a family, and we are very determined to continue as owners, shareholders and creators of long-term value for all shareholders,” according to Kotak.
– With the help of Jeanette Rodrigues.
(Except for the title, this story was not edited by GalacticGaming staff and is posted from a syndicated feed.)
