Premji Invest and billionaire Narayana Murthy-backed Catamaran Ventures were among the first to seek approvals
GIFT City aspires to evolve into a financial hub unhampered by rules and taxes
GIFT City aims to be the top preference for resident Indians eyeing offices in Singapore and London
Azim Premji’s Bengaluru-based investment arm Premji Invest has obtained an in-principle approval to establish a family investment fund at Gujarat International Finance Tec-City (GIFT City), situated in Prime Minister Narendra Modi’s home state, according to a Moneycoltrol report.
Numerous applications for Family Investment Funds (FIFs), enabling families to invest across diverse offshore asset classes and instruments, are still awaiting approval.
Premji Invest and billionaire Narayana Murthy-backed Catamaran Ventures were among the first to seek approvals.
Promoted as a free-market pilot, GIFT City is poised to revolutionise India’s financial landscape, albeit with a much-needed streamlined set of regulations and procedures.
India’s growing wealth has led to an increased demand for portfolio diversification and the establishment of family offices. Following the Reserve Bank of India’s relaxation of rules in August 2022, allowing non-financial entities to invest up to 400% of their net worth through overseas offices, wealthy Indians began exploring investment offices abroad. However, a few months later, the regulator communicated to bankers that these rules were not intended for setting up family offices abroad.
The Reserve Bank of India has yet to release clarifications on this matter despite indicating its intention to do so, and it has not responded to requests for comments.
GIFT City aims to be the top preference for resident Indians eyeing offices in Singapore and London. The International Financial Services Centres Authority (IFSCA) provides a detailed framework for establishing such funds. IFSCA also targets the Indian diaspora seeking investment opportunities within the country and foreigners looking for prospects in emerging markets.
The development comes after Prime Minister Narendra Modi commented that new forms of capital and digital technology will play an important role in the development of GIFT City.
The Centre is looking to develop GIFT City, developed under the Special Economic Zones Act of 2005, with two distinctive zones – the GIFT SEZ (the non-IFSC area) and the GIFT IFSC, as a global financial hub. Additionally, there’s an emphasis on promoting GIFT as a virtual offshore destination for startups and investors.
Further, angel investment networking platform We Founder Circle’s (WFC) GIFT City Fund recently secured $10 Mn (around INR 83 Cr). The fund has a target corpus of $30 Mn, with a green shoe option of $30 Mn. It has invested in six startups – Nintee, Zivy, Pixxel, Trading Leagues, Piersight, and Aistra Labs.
In June 2023, public equities investment firm Airavat Capital announced the launch of Airavat Global Technology Fund R (AGTF R), a global technology fund based in GIFT City.
