India's Kotak International receives investment management licence from UAE regulator

Move is expected to help convert country's vast Indian expat community into client pool, analyst says

India's Kotak International has offices in Abu Dhabi, Dubai, London, Mauritius, New York and Singapore. Getty Images

Kotak International, the global investment management unit of India's third-largest private bank Kotak Mahindra, has received a licence to conduct investment activities in the UAE, allowing it to tap into the country's substantial Indian expat community.

The company, which had more than $6 billion in assets under management at the end of June, said it is the first Indian asset manager to receive such a licence from the UAE's Securities and Commodities Authority.

The licence will not only allow Mumbai-based Kotak International to launch UAE-domiciled funds for retail investors, but will also help in boosting the investment fund industry in the Arab world's second-largest economy, it said in a statement on Monday.

Kotak is planning to launch funds similar to its undertakings for collective investment in transferable securities (Ucits) domiciled in India and Luxembourg, with subscriptions expected to open for investors in the UAE later this year, it added.

Tapping into the UAE's growing investment scene is complemented by India's economic momentum and investor interest in diversifying their portfolios, Kotak International president Shyam Kumar said.

“India’s economic momentum continues to attract global interest and through this licence ... UAE retail investors [will be able to] access India-focused investment strategies − enabling them to participate in one of the world’s dynamic and resilient markets," he added.

The UAE and India have maintained strong economic relations for decades, with mutual co-operation in several key sectors, including investments and finance.

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The relationship between the countries was further boosted by the signing of a Comprehensive Economic Partnership Agreement, one of dozens the Emirates has forged to strengthen its own economy and benefit from the investment potential of other countries.

Indians currently comprise the UAE's largest expat community, with more than 3.5 million residents in the country.

Obtaining a licence will help Kotak International convert part of that community into a significant client pool, in addition to supporting revenue streams and global expansion, said Faisal Hasan, chief investment officer of Dubai-based financial services firm Al Mal Capital.

"This strengthens their [assets under management] base with more stable diaspora flows, enhances brand credibility and helps diversify their distribution in the UAE and the Gulf at large," he told The National. "It enhances trust and credibility among investors, especially retail Indian expatriates who may be cautious about cross-border investments."

The move also shows that UAE regulators are willing to accommodate cross-border financial products, as long as they meet transparency and compliance standards, he added.

"There is also scope to market to Indian family offices and HNWIs [high net worth individuals] in the UAE who already have emotional and business ties to India ... this suggests a friendlier environment for foreign investment firms that want to access the UAE market," Mr Hasan said.

Kotak International's entry also further cements the UAE's status as a "strong and strategic hub" for financial activity, said Osama Al Saifi, managing director for the Middle East and North Africa Dubai-based financial services firm Traze.

"For financial groups with little or no presence in the UAE, it demonstrates opportunities for growth, diversification and cross-border investment, encouraging them to consider entering the market," he told The National.

Kotak International, founded in 1994, offers management, advisory and investment solutions seeking exposure to Indian markets, and has offices in Abu Dhabi, Dubai, London, Mauritius, New York and Singapore. The company has also received regulatory approval in Mauritius, Singapore, the US and the UK to conduct investment activities and services.