The UK small caps which can exploit Indian power shortage

Ignis UK Smaller Companies fund manager, Citywire A-rated David Clark (above), draws attention to a number of UK small caps which could surge on the back of the power shortage in India.

As an investor in UK Smaller Companies it is inevitable that one is exposed to a huge variety of organisations operating in vastly different fields.

One becomes quite knowledgeable about all kinds of businesses – from oil rig construction to commercial bull semen production (no kidding!). Rarely is life dull.

In addition to what we might think of as traditional UK companies, there are a number of organisations whose operations are not based in Britain, but have a stock market quote here.

There are Canadian, Ukrainian, Chinese and American companies listed in London, among many others. However, my current favourites are Indian companies.

India is undergoing huge change. It is a fully fledged democracy making a transition, in the span of an average person’s lifetime, from abject poverty to impressive economic success and a growth rate to kill for. It is not just the world’s perception of India that is undergoing this transformation, but it is also India’s perception of itself.

The pace of change is truly astonishing and all the more so when one considers the size of the country, its cultural diversity and even its multitude of languages. There are numerous huge infrastructure projects underway (the government plans to build 200km of road a day!), supported by an increasingly educated workforce who are strongly motivated and keen to enjoy the fruits of their labours.

The aspirations of young people in India are no different from those of young people in the western world, and they can see what progress can bring them by going online, by watching any one of the 200 or so TV channels or by visiting modern shopping malls.

No-one is suggesting for a moment that there are not issues created by such numerous paradigm shifts, problems to be overcome. There is one problem of India’s that particularly interests me. Power. I mean electrical power. Or more specifically, the lack of it.

India suffers from a chronic and systemic shortage of power. Demand greatly exceeds supply. The first thing they teach you in economics class is that when supply lags demand, the price goes up. For me, this means opportunity.