More Indian asset managers shift overseas business to GIFT City

Aditya Birla Sun Life Amc

09/02/2024 05:46

By Jayshree  P Upadhyay
       Mumbai, Feb 9 (Reuters) - Several Indian asset managers
said they are moving, or planning to move, some offshore fund
business from financial centres such as Dubai and Singapore to a
finance hub in the western state of Gujarat to gain better
access to India's capital markets.
    The Indian government is promoting the Gujarat International
Finance Tec-City, or GIFT City, as a "gateway for global capital
and financial services for the economy" and is trying to attract
companies through tax-breaks and other incentives.
    In the last six months, about eight of the 10 biggest Indian
asset managers by assets have either relocated their business,
or set up new funds or filed for permits to move to GIFT City,
according to executives at these funds.
    "The stable regulatory regime and proximity to the Indian
markets is driving our decision," said Swarup Mohanty, chief
executive of Mirae Asset Investment Managers, which has shifted
a $200 million Hong Kong based fund to GIFT City and is in
"active" consideration to move a second fund.
    Mirae Asset Investment Managers is the Indian unit of South
Korea's Mirae Asset Financial Group.
    Mirae expects to manage $435 million out of GIFT City in the
near term. The fund has a total of 1.46 trillion Indian rupees 
($17.58 billion) of assets under management in India.
    GIFT City offers companies that set up there a 10-year tax
break and does not charge taxes on transfer of funds from
overseas jurisdictions. There are no capital gains taxes for
investing in units set at up GIFT City, similar to Singapore or
Dubai. 
    "It is substantially more cost effective to run a fund in
GIFT City as compared to Mauritius and Singapore due to lower
cost of living, rentals and cost of manpower," said Sachin
Samant, president banking and financial institutions group at
Kotak Mahindra Bank. The bank has an office at GIFT City and has
been helping  funds set up their operations there. 
    DSP Mutual Fund, which manages $20 billion in assets in
India and offshore, plans to move its Mauritius-based operation,
which manages $450-500 million in assets, to GIFT City by March,
said Jay Kothari, a senior vice-president.
    Aditya Birla Sun Life AMC, India's sixth largest asset
manager with 3.08 trillion rupees under management, is also
moving operations from Dubai and Singapore to GIFT City.
    "Outside of multiple inbound funds, we have one outbound
fund and have an approval to set up an ESG-focused fund with
seed investment already in place," said A. Balasubramanian,
chief executive for Aditya Birla Sun Life AMC.
    Over 80 fund managers with commitments of $30 billion and
investments of over $2.93 billion have been set up in GIFT City
in the last three years, according to data from the
International Financial Services Regulatory Authority (IFSCA),
which regulates financial services in GIFT City. 

 ($1 = 83.0290 Indian rupees)

 (Reporting by Jayshree P Upadhyay; editing by Miral Fahmy)
 ((Jayshree.Pyasi@thomsonreuters.com; 9920092491; Reuters
Messaging: Twitter: @jaysh88))