Top funds make a beeline at GIFT City | Economic Times

MUMBAI: At least half a dozen entities, including Kotak Mahindra Capital, ASK Investment Advisories, Avendus Group and Multiples Alternate Asset Management, are planning to set up Alternative Investment Funds (AIF) in the Gujarat GIFT City.The funds are expected to anchor in the international special economic zone that offers relaxations to investors, unlike the local arena. They will gradually raise money for AIFs from global institutions only to deploy mostly into local industrial sectors.Kotak said it is planning to set up a fund at GIFT City for the attractive tax benefits.“We are considering setting up an AIF in the GIFT City given the attractive regulatory provision for our international limited partners, or LPs,” said Srini Sriniwasan, Managing Director, Kotak Investment Advisors. “However, at this point it is too early to talk about specifics with regard to any fund raise.”Mails/texts sent to other funds and investment firms didn’t elicit a reply until the publication of this report.Technology, life sciences, healthcare, pharma, fintech and consumption businesses remain some of the popular investment themes for deployment.Earlier last year, the government extended tax benefits for investors operating out of GIFT City for another ten years. The facility also provides exemption from dividend distribution tax (DDT), capital gains, and interest payment on loans taken from non-residents. “We are witnessing a substantial increase in interest in setting up of AIFs in IFSC,” said Siddarth Shah, senior funds partner at Khaitan & Co. “With the government relaxing norms for IFSC based AIFs, it has triggered a significant interest among domestic players in tapping this opportunity.”Looking at overall growth in the fund raising activities and pedigree of players exploring GIFT based AIFs, “it would not be surprising at all to see aggregate commitments for GIFT based AIFs breaching a billion dollars over the coming months,” he said.In 2015, market regulator SEBI had provided the basic framework for AIFs in the International Financial Services Centre at GIFT City.In 2012, SEBI introduced AIF framework with an intention to regulate unregistered pooling vehicles.“With the Indian economy poised to grow rapidly, and with investments in local projects set to multiply, there is heightened interest for setting up such funds in India’s IFSC at GIFT City,” said said Tapan Ray, Managing Director & Group CEO at GIFT City. “AIFs are popular and often preferred routes to channel investments across the globe.”At present, more than 600 AIFs are estimated to be registered with the capital market. Some of the key benefits include corporate tax holiday, single-regulator approval process, leveraging, and other tax-related exemptions. Many of these advantages don’t apply to AIFs set up locally.There is a 100% corporate tax exemption for 10 consecutive years out of the block of 15 years, for manager/ sponsor in IFSC. The government has also reduced the Minimum Alternate Tax (MAT) / Alternate Minimum Tax rate to 9%. No Goods and Services Tax (GST) applies for IFSC at GIFT City.Private equity and venture capital investments in India have witnessed a 6.6 per cent increase in 2020 to a record $39.2 billion from $36.3 billion in 2019, according to data compiled by Venture Intelligence.