Financial opportunities beyond Masala Bonds

Financial opportunities beyond Masala Bonds
Financial opportunities beyond Masala Bonds

London Stock Exchange has proved a popular choice for investors keen to participate in the India growth story, writes a keen observer of the trend. Despite macro economic uncertainty, London Stock Exchange Group is showing itself to be the ideal partner to India, as Prime Minister Modi embarks on his ambitious plans to revolutionise the country's economy and infrastructure. These plans need growth finance and through London, Indian issuers have access to investors from around the world who are eager to play the vital role of capital providers in the India growth story. In Prime Minister Modi's historic Wembley stadium speech in 2015, he announced $1 billion equivalent of Masala Bond issuance in the UK to support India's ambitious targets. And Indian issuers are turning to London to raise this capital, highlighting their continued confidence in UK and enduring strength of UK India economic ties. London Stock Exchange is home to a number of global first Masala Bond issuances - from National Highways Authority of India's first global offshore Masala Bond in May, to the world's largest corporate Masala bond from HDFC in March and the first Indian green Masala bond issuance from NTPC last August. Only last month, the Rural Electrification Corporation of India listed its first green bond in London. Almost four times oversubscribed, it raised $450 million from international investors, to promote renewable energy projects across the country. As well as a significant milestone for the company, it also marks the first green bond listing on our International Securities Market, a new market for the issuance and trading of UK and international debt. The launch was supported by India's Minister of State for Power and Renewable Energy, Shri Piyush Goyal, who sees London as the long-term financing partner to India. But Masala Bonds aren't the only asset class available to Indian issuers. Listed funds, pooling money from investors to back different sectors such as housing and renewable energy, are an exciting opportunity for the Indian market. Through listed funds, Indian and international issuers and investors could take a stake and support in India's economic rise. London is already an attractive market for international fund managers and a range of diversified funds. In 2017 alone, London Stock Exchange has welcomed microcap funds, supporting SMEs, real estate specific funds for social housing, private rented sector and student property and life sciences debt funds. We marked a record first half of the year for fund listings and money raised on London Stock Exchange this month. The total capital raised by funds and real estate investment trusts during the six months to June reached £5 billion. Nine fund IPOs raised £1.4 billion whilst existing London-listed funds raised £3.6 billion in follow-on fundraisings. We enjoy an open and active dialogue with our Indian counterparts. I was in Mumbai, Bengaluru and Delhi in March this year to talk about the quality of fund products we're seeing in London. We believe that the growing number of high quality fund managers with strong track records, together with the renewed stability in the Rupee and offshore hedging products, will help bring funds into the mainstream in India. This new asset class can work alongside Indian Infrastructure Investment Trusts (InvITs) to support India's quest for reform. It could offer global investors access to India's economic growth and familiar trading and settlement arrangements in their own time zone. But whilst operating infrastructure asset classes in India can be financed through InvITs, as well as other instruments such as domestic and international equity and debt, there is still no recognised model for development infrastructure asset classes. LSEG is working with buy-side investors and other stakeholders to create more innovative structures to bridge this important funding gap. And it is not just raising capital where our two great countries are working together. We are also ensuring investors have the data and analytics to make informed decisions. For example, the State Bank of India is working in partnership with FTSE Russell, part of London Stock Exchange Group and a global leader in indices and data provision, to develop a new Indian fixed income index and to launch a new investment product based on India. Indices like these are fundamental to building investment in India, creating deeper pools of international liquidity and a credible global benchmark to guide investment and support the crucial secondary market. It is effective and constant innovation that will keep driving global investment in India. The country is at the vanguard of a new trend: innovation in long term, sustainable financing of infrastructure and London Stock Exchange is committed, across asset classes, to supporting the country in achieving its aspirations. Darko Hajdukovic is Head of Analytics, Fixed Income and Funds, Primary Markets, London Stock Exchange Group.

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