Economy
ADIA to enter GIFT City, more sovereign funds could follow
Summary
- ADIA’s investments in India have surged in recent times, solidifying its position as a key pillar in the bilateral ties between the UAE and India
The International Financial Services Centre (IFSC), in Gandhinagar’s GIFT City, has secured the backing of the Abu Dhabi Investment Authority (ADIA), which has $853 billion in assets.
According to a joint statement by India and the UAE last week, ADIA will set up its presence in GIFT City to fortify the investment ties between the two countries. The announcement follows Prime Minister Narendra Modi’s visit to the UAE.
However, people familiar with the matter said the partnership with ADIA will diverge significantly from that of other prominent funds that have set up shop in GIFT City.
So far, funds and foreign institutions have primarily set up offices in GIFT City due to the tax incentives offered by the special economic zone. In contrast, ADIA will not get any additional tax benefits by setting up an office there, as it already enjoys a favourable tax regime for being a sovereign wealth fund (SWF).
According to the people familiar with the matter, ADIA’s presence will attract other sovereign funds to establish their fund management businesses around Gandhinagar. “With ADIA’s presence, GIFT City will experience a significant boost in appeal to foreign investors, serving as a catalyst for attracting additional international capital. This, in turn, will foster a more dynamic and thriving fund ecosystem in GIFT City," said Suresh Swamy, partner, Price Waterhouse & Co. LLP.
“It is high time for other sovereign funds and global investment companies to recognize the immense potential of GIFT City, and make it a part of their plans for India," Swamy added.
ADIA declined to comment on the development.
The sovereign wealth fund is expected to transfer some of its investments to the entity setting up shop in IFSC.
The Centre offered explicit tax exemption to funds owned by ADIA if they were to relocate from their existing jurisdiction to GIFT City, according to the announcements in the Union Budget for FY24.
ADIA’s investments in the Indian markets have surged in recent times, solidifying its position as a key pillar in the bilateral ties between the UAE and India. The UAE emerged as the fourth-largest investor in India in FY23, rising from seventh the year before.
ADIA is multi-asset class investment fund that puts money in diverse products. It is a major player in infrastructure funding along with interests in both listed and unlisted equities. ADIA is one of the investors in the National Investment and Infrastructure Fund, which is backed by the Indian government. In the unlisted space, ADIA last purchased a stake worth $500 million in Indian eyewear retailer Lenskart in March.
