So, if you could only pick one emerging market heavyweight, would you rather invest in China or India? That was the question posed to limited partners at Wednesday’s China Venture Capital Forum in Palo Alto.
The answers were mixed, but mostly reflected a similar bias among LPs. They preferred to stick with the one they know better.
Andrew Fine, partner at Novel TMT Capital Partners, averred a preference for China, where his firm has been active for decades.
“India is attractive,” Fine said. “But it’s not really a priority because we don’t really see ourselves having an edge.”
Mark Louie of C.M. Capital also admitted a bias for China, where the firm has an overweight portfolio position. That said, Louie noted there are some advantages to investing in India, such as a more developed securities market.
LPs also saw ability to conduct business effectively without learning a second language as a plus for India.
“Personally, I lean a little more toward India because it’s a little more intuitive as an English-speaking investor,” said John Dominguez of Offit Hall Capital Management, adding that “as a firm we’ve been very bullish about investing in China.”
Overall, U.S. investors tend to have a higher comfort level with investing in India, said Jeffrey Mansukhani of Cambridge Associates. But investors, he added, face obstacles galore pursuing private equity in both countries.
“They’re both pretty abysmal,” he said, pointing to the laws and regulations related to investing in China as particularly cumbersome. “It’s which is the lesser of two evils.”