Citi in India acted as Qualified Depository Participant (QDP), custodian and execution broker for an investment made by South African financial services group Sanlam through the countrys Qualified Foreign Investor (QFI) scheme.
The investment of around $111 million is the largest investment made by a QFI in India, since the easing of QFI regulations for investing in Indian equities over the past few quarters.
The transaction, the first of its kind supported by a foreign bank custodian in India, reinforces the efforts of the Government of India (GOI) to allow QFIs to directly invest in the Indian equity market, with Sanlam making an equity investment in a listed stock in India through this scheme.
Commenting on the investment made by Sanlam, Gagan Rai, managing director & CEO of Indias National Securities Depositary in said: Citi was among our first custodian partners who have been at the forefront of educating investors on newer formats of investment like the recently simplified QFI scheme. As the Central Depository, we understand Sanlams recent investment of around $111 million is the single largest QFI investment in direct equity in India post the several amendments made to the QFI regulations over the last few quarters. Post this transaction current investments stand at approximately INR 6.8 billion ($126 million) in Indian equities and INR 4.4 billion ($82 million) in fixed income though this investment route. We are confident that investments will significantly increase over the year as investors understand the many benefits of investing as a QFI.
The QFI framework simplified India access for foreign investors who are members of the Financial Action Task Force (FATF) jurisdictions, allowing them to invest in India without being registered with the Securities and Exchange Board of India (SEBI) or meeting the set eligibility criteria for a Foreign Institutional Investor or Sub-Account in India. The revised guidelines announced by the GOI permits QFIs to open a segregated bank account in India and allow QDPs to rely on authorized intermediaries like global custodians to verify certain documents, allow primary account number (PAN) card copy to be verified online, among others. These changes in regulations are expected to widen the class of foreign investors and deepen the Indian capital market, thereby helping reduce market volatility in the equity markets.
(JDC)