When 19th century literary figure Brigadier-General Sir Harry Paget Flashman sought adventure in India, he carried the fantasies of thousands of men across Britain's vast empire.
 
Immortalised in books written by Thomas Hughes and George Macdonald Fraser, Englishmen today can still enjoy his adventures and perhaps even fantasise about returning to past colonial days. It is a past that still resonates in India today.

"There were only a few advantages to being colonised by the British, but they were powerful," MLC investment strategist Brian Parker says.
 
"They are the English language, the British rule of law and a love of cricket."

It is these attributes that analysts say will make India a long-term story compared with its neighbouring superpower China.

"By and large China has been run by communist-educated engineers. There are no leaders in China that could inspire genuine change. India is a melting pot of religions and cultures. It has had its fair share of ethnic and religious violence and leadership assassinations. Yet today India is still a secular democracy and that is a massive achievement for an emerging country," Parker says.

India is a country of extremes. In a population of over 1 billion, 29 per cent live in poverty, while 300 million reside in the middle classes.

With 1652 dialects, it remains the largest English-speaking nation in the world. Statistics show 36 per cent of NASA scientists are Indian, and yet 40 per cent of Indians do not meet the literacy standards of the World Bank.

Global car manufacturers Suzuki and Hyundai have established manufacturing plants there, while the country is tipped to produce the cheapest Aston Martin. Yet roads are filled with human-led rickshaws, many dodging the sacred cows that still freely roam the streets. 

Despite such contradictions, India's middle class continues to grow. The population is not only large but also young, with those between 20 and 55 years of age expected to make up 55 per cent of the population by 2016.

And according to World Bank statistics, it is growing wealthier with more than 50 per cent of households expected to earn $1000 to $5000 a year by 2010. These factors all present a lucrative opportunity for global financial services companies, including those from Australia.

Aussies in India
Government agency InvestAustralia notes on its website that "Australia and India have substantial converging commercial interests, due in part to the changing international environment".

In 2006, India became Australia's sixth largest export market with exports reaching $10.3 billion, eclipsing the United Kingdom for the first time.

Australian businessman Denis Carroll says there is a very strong but unrecognised link between Australia and India. "Indians want to do business with Australians. They believe we have a long-term view to investing. They respect our approach and our money."

In 2000, the Indian Government opened up the insurance market, effectively dismantling the Life Insurance Company of India's (LIC) monopoly.

It was an opportunity seized by insurance company Axa Asia Pacific. The group established a joint venture with India insurance group Bharti Enterprises.

The joint life insurance business began in August 2006. New business premiums for the group accelerated by a staggering 100 per cent in 2006/07, with the company gaining US$32 billion in premiums sales. The rebranded Bharti Axa Life Insurance Company now has 14 million customers with a sales force of over 2200 and 870 salaried planners. The group expects to make an additional $65-85 million in capital commitments in the next three years.

"India represents a significant growth opportunity for our firm," an Axa spokesperson said.

As one would expect, it is a country Macquarie Bank has already tapped into. The bank has an established a banking service that includes corporate finance, equity funds and research.

The group was established by Macquarie's Mumbai office chief, Stuart Smythe. Smythe arrived in Mumbai two-and-a-half years ago from Macquarie's Manhattan office. Did he find the cultural extremes daunting?

"Mumbai is like any global city, lots of people with lots of things to do," Smythe says.

The bank now has 100 people working in its Mumbai office, four of who are expats.

Given India's massive population, Smythe said India still had a tight labour market.

"Right across India the battle for quality staff is a challenge. A well-educated workforce in the country has also been targeted by offshore companies looking to recruit for their own countries," he says.

With no established distribution, Macquarie still managed to grow its client base.

"We managed to build our presence in India by servicing our international clients who had invested in the country," Smythe says.

Its Indian banking operations are only the tip of the iceberg, according to Smythe, who says there is still a lot more to do. In October,

Macquarie announced a joint venture with Indian fund manager Religare Wealth Management. It took a 50 per cent stake in the firm, giving the bank access to 1215 of Religare's branches in 392 cities and towns.

"Macquarie has been looking to establish a wealth management business in India for some time but needed to find the right partner," Macquarie Financial Services group head Peter Maher says.

"Like Macquarie, Religare is entrepreneurial, its management and staff are innovative and visionary."

The great game
The culture of cricket is another important aspect shared between the two countries and Carroll points out that the cricketing link should not be underestimated.

"Cricket is something that will bind the two countries forever," he says. 

Cricketers like Steve Waugh, Brett Lee and the hapless but loveable Shane Warne are virtually worshipped among India's one billion cricket tragics. While Lee has gone on to feature in Bollywood films, Waugh now represents the interests of Macquarie Bank in the country.

Savvy enough to appoint one of India's most admired cricketers, the bank has entered into a joint venture with Waugh through development company Milestone Communities. Milestone Communities is a real estate group that develops tailored residential communities around sports, health and education facilities.

"India provides an environment receptive to innovative ideas and with the energy to make those ideas happen," Waugh says.

Economy charges ahead
Capitalising on India's growing population is not restricted to the wealth management sector. Over the past two years the economy has grown 9 per cent and forecasts are optimistic at 8.5 per cent-plus growth in coming years.

This growth is fuelling the demand for infrastructure, telecommunications and property. Investment in these assets is required to sustain the growth, according to Baer Capital executive director M. Padmanabhan.

As a private equity manager, Padmanabhan says the industry is evolving with about US$13.5 billion flowing into the country. These inflows are expected to touch US$20 billion by 2010 and US$490 billion in the following decade.

So far the Dubai-based Baer Capital has invested US$200 million in private equity and is expected to close one of its funds in October to the tune of US$50 million.

The private equity manager has invested in a diverse range of burgeoning Indian companies, including contemporary art group ArtCo and maintenance and engineering services firm A2Z.

With galleries in Mumbai, New York and an office in London, ArtCo delivered a net profit of over US$5 million in 2006. A2Z on the other hand has taken advantage of India's central government finance initiatives in telecommunications.

Securing contracts to revamp the distribution of India's power companies. Padmanabhan warns, however, that private equity can be very risky in India. To ensure the security of its investments, Baer Capital has taken board positions on each of its invested companies. Infrastructure is also desperately needed to support and sustain the growth of the economy. Macquarie Bank is set to launch its Macquarie India Infrastructure Opportunities Fund by the end of the year.

The World Bank is expected to be the fund's cornerstone investor following approval from the bank's International Finance Corporation. The fund will invest in infrastructure and infrastructure-related assets in India, including roads, airports, ports, power, generation, power transmission, water and waste treatment.

Paying less for more
India is not just a country for the big players and multinationals. Carroll, who is the former chief of industry superannuation fund AV Super, has established a property business, Ausindi.

With an on-the-ground team in India, the company will source opportunistic property deals. Its first property investment is a five-star hotel in Chennai.

"I first went to India in January 2006 and saw it offered a compelling investment case compared with China. I wanted to get first mover advantage," Carroll says.

As a lone businessman, he says it is imperative the right investment partners are found if you are to grow and sustain your business.

"It's a dynamic but complex market. It is important in any business relationship but especially important in India to have these solid relationships. Political risk cannot be dismissed," he says.

Ausindi will focus its investments in southern India because of the region's economic and political stability. "There are definitely parts of India you would not invest in," Carroll says.

Local small cap fund manager Atom Funds Management decided to run its research and analysis from India and in 2006 established a nine-person team in Bangalore.

With Australian analysts commanding large base salaries plus bonus, Wilson looked to India's huge educated population as a potential source to hire its analysts.

"We wanted to be a boutique but with the resources of a large fund manager," Atom managing director Drew Wilson says.

"Indians have a culture of maths. They are naturally inquisitive and entrepreneurial."

The firm's recruitment process included an advertisement on India's job seeking website naukri.com. By the end of the first day the company had received 400 responses.

The process was followed by a telephone interview to ensure candidates' English was sound. A formal interview and pre-testing to check on numeracy skills followed. The company then organised an analyst open day.

"You could never imagine organising an analyst day in Australia. Analysts here would simply not turn up," Wilson says.

While competition for the best and brightest was tough, he says many of the multinationals in India employ well-educated people as "data monkeys".

"These graduates go into these companies thinking they can apply their skill honed while completing PhDs. They turn up and are then asked to enter data. What attracted people to our company was the fact that they could use their skills to analyse Australia's small cap stocks," he says.

Wilson flies six to seven times a year to meet his analysts. With technology and an easy time difference, the agreement is working well. Like Carroll, Wilson says it is imperative to get the right adviser for any business looking to set up shop in India. 

"As a business you must ensure that you are always complying with the law, your adviser will ensure you do this. They play an important part in watching your back," he says.

There are plans to expand the Bangalore office, but for now Wilson is concentring on his existing team of analysts and the growth of the business.

"They say that you can't change India; India changes you. I would definitely agree. This has been such an adventure for me. It has been the highlight to my career," he says.