U.S. investment firm sees opportuinity if India slows

By Himangshu Watts

MUMBAI (Reuters) - U.S. investment firm Berggruen Holdings Inc expects the flow of foreign funds into India to slow down, creating big opportunities in real estate, private equity and potentially in the stock market, its founder said on Tuesday.

India could not be immune to a global tightening of credit and rising risk aversion, despite its rapid growth and enormous potential, Nicolas Berggruen, the firm's founder and president, told Reuters.

"India is being affected and will be affected as well. The question is how severe is the situation? It is impossible to know today, but it could carry for a while and it will certainly slow things down," he said.

"These funds, if they are hit at home, they will be more cautious abroad and they will have less resources, less time, less money if they are hit by global liquidity crisis."

India's economic growth has averaged 8.6 percent over the last four fiscal years, with a 9.4 percent surge in the year to end-March 2007 - the country's fastest growth in 18 years - making it a trillion dollar economy.

The main stock index has quintupled since the start of the 2003/04 financial year, drawing foreign investors who did not want to miss out as India opened up its economy.

"The fact that you had such a rush to invest here and maybe too easy money here in terms of equity, debt etc, you may have a slowdown of that," Berggruen said.

Such as scenario would be an opportunity for his firm, which started Indian operations a year ago with an investment of $300 million and plans to invest another $300 million in the next two years.