The National Pension Service of South Korea plans to open its fourth overseas office in San Francisco and is eyeing Mumbai as its next investment hub, aiming to tap into India’s booming economy and high growth potential as an alternative investment destination to China.
By opening a local office in India, NPS aims to identify attractive investment opportunities in the country, which is emerging as an alternative investment destination to China due to its high growth potential.
The financial investment industry reported on Feb. 26 that the investment management division of NPS is seriously considering Mumbai, India, as the location for its 5th overseas office. Currently, NPS operates overseas offices in three locations: New York, USA; London, UK; and Singapore. Later this year, it will open an office in San Francisco, USA.
The reason why NPS is entering the Indian market is because of the country’s rapid emergence as a new core of the global economy and its strong IT competitiveness.
With the third-highest number of unicorns (unlisted startups valued at over $1 billion) after the USA and China, it is known that India has potential as a global economic powerhouse, which makes it an attractive market for NPS to expand into.
India is expected to benefit from the global supply chain restructuring. To push the drive, the Indian government is also putting in place policies to revive the manufacturing sector, with a particular focus on the ‘Make in India’ campaign.
The ‘Make in India’ initiative was launched globally in 2014 as part of India’s renewed focus on manufacturing. The objective of the initiative is to promote India as the most preferred global manufacturing destination.
As a result of these efforts, foreign direct investment (FDI) in India has been rapidly increasing in recent times. Furthermore, India has a high proportion of young, educated labor force. The International Monetary Fund (IMF) predicts that India will surpass Japan and Germany to become the world’s third-largest economy by 2027.
Especially, Mumbai is considered the financial capital of India, attracting the attention of global institutional investors who are keen to set up local offices there.
Investment companies like Temasek, owned by the Government of Singapore, Khazanah Nasional Berhad, the sovereign wealth fund of the Government of Malaysia, Singapore’s Investment Corporation (GIC), and Canada’s Pension Plan Investment Board (CPPIB) have already established offices in Mumbai.
Recently, the Korea Investment Corporation (KIC) also received approval from the Reserve Bank of India (RBI) to open its office in Mumbai.
Also, several sovereign wealth funds from the Middle East, such as the Saudi Arabian Public Investment Fund (PIF), Abu Dhabi Investment Authority (ADIA), and Qatar Investment Authority (QIA), plan to establish their offices in Mumbai.
Kim Hoo-jung, a researcher at Yuanta Securities, said, “Global institutions are decreasing their investment shares in China by either adjusting benchmarks or refraining from making new investments.”
“It is expected that the number of institutions establishing their offices in Mumbai will increase significantly by 2024,” he added.
Korea Investment Corporation (KIC), which entered the Indian market before the National Pension System (NPS) and now plans to focus on securing promising alternative investment opportunities through its Mumbai office.
The company is interested in exploring venture capital (VC) and private equity (PE) investment opportunities that arise from India’s rich IT ecosystem and expanding domestic market. Additionally, KIC is expected to invest in real assets such as infrastructure and real estate in India.
An insider from the industry stated, “The NPS plans to use its India office in a similar manner to KIC.”