Govt gets more sovereign fund proposals from Middle-East

After setting up a sovereign fund with Oman, the government is now understood to be in talks with other Middle-East countries to set up a similar fund. As part of the initiative, the government has already finalised details for another multi-billion dollar joint investment fund with Qatar. Bankers feel that given the liquidity crunch faced by the infrastructure sector, these sovereign funds would offer it a fresh lease of life. Given the growing infrastructural requirements, these funds would help enhance market liquidity and facilitate a more efficient allocation of resources. A senior finance ministry official, who refused to be identified, said that the government is currently examining proposals from other Gulf countries as well. "There have been similar requests. The approval would depend on the nature of the fund and the bilateral relations between the two countries," the official said. According to the official, the rush is due to the fact that the Middle-East countries are flush with funds and India is an exciting destination. Already, the government has chosen a public sector entity, State Bank of India (SBI), to act as nodal agency for operating the joint investment fund with Oman and Qatar. Earlier this year, the government had signed an memorandum of understanding (MoU) with the Oman government to that effect. When contacted, State Bank of India chairman O P Bhatt told SundayET that such a proposal is being worked out with Oman. However, he refused to share details saying, "it's too early to divulge anything." The multi-billion dollar joint investment fund with Qatar will explore investments in the infrastructure sector in the two countries. An economist said the Middle-East countries are in a position to invest, thanks to the petro dollars. "These nations have deep pockets. The countries in the Middle-East now want to diversify their risks and invest outside the West, where traditionally they've been a large investor," he said. The Middle-East boasts of some of the biggest Sovereign Wealth Funds in the world. The biggest one is the Abu Dhabi Investment Authority, with $875 billion in assets under management. The Oman and Indian governments' $100 million Joint Investment Fund intends to invest in core infrastructure and real estate sectors.