India most attractive to investors now: Uday Kotak on Covid-19 fallout
Uday Kotak, the richest banker of Asia said, overseas investors should look to invest in Indian digital to consumer sector companies now as the economic fallout of the coronavirus pandemic makes valuations of businesses attractive.
On Thursday, at the Economic Summit of Bloomberg India, in conversation with the Cofounder of Carlye Group Inc. David Rubenstein, Kotak Mahindra Bank Ltd. managing director, Uday Kotak said, "I have always believed you have to invest in India when things look more challenging. That's the best time to put your money to work."
The early stage of the digital boom in China looks very similar to the current transformation that India is going through with the keen interest of overseas investors to pour money into sectors including digital payments and e-commerce. The importance of the sector increased due to the forced lockdown in late March because of Covid-19.
Asia's richest man, Mukesh Ambani rose at least $20 billion by selling 33% shares of Jio Platforms Ltd to Google, Facebook Inc., and other investors. Within the past 2 months only, Reliance Retail mopped up $5.1 billion from sovereign wealth funds and private equity.
Kotak said, the "right sectors" to invest in India now include digital, e-commerce, technology, pharmaceutical, and consumers.
The investment rate in the health care sector is surging. KKR & Co. declared that it would acquire J.B. Chemicals and Pharmaceuticals Ltd. controlling stake in July. Whereas 20% stakes of the pharmaceutical business of Ajay Piramal's, Indian billionaire were purchased by the Carlyle Group.
Rubenstein said, "The best place to invest in the world outside of the U.S. over the next ten years or so are certainly going to be India and China. India has not had as much capital from outside as China has had, but I do think in the next ten years that would change, and India is increasingly seen as an attractive place to invest for foreign capital."
Kotak said the banking sector is "ripe for significant structural change." According to him, the market share of private sector banks in India will rise to about 50% from the current 35% over the next decade.
According to the data of RBI, as of March, the loan of Private banks grew annually by 11.3% which is 3 times more than state-controlled banks' pace.
While addressing the questions regarding succession, Kotak said there are no rules as of now that cap his tenure at the Mumbai-based bank's helm, he added that the lender has measures in place for long-term succession planning.
He stated, at a later stage, and "not in the near future," he might consider a role as a non-executive director of the bank he founded and manages.
A 10-year cap has been proposed by the RBI for the founders of the bank who hold the position of full-time director or CEO. Once the rule is implemented, Uday Kotak who is currently 61 will have to step down from his position in 2022.
He has been the CEO of Kotak Mahindra Bank for 17 years. Earlier this year, Kotak cut his stake from 30% to 26% to settle a court battle with the Reserve Bank of India.
According to Kotak, in the bank, "we are 26% shareholders as a family, and we are very committed to continuing as long-term owners, shareholders and value creators for all shareholders."
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