Artha Bharat Investment Managers is moving two master funds from GIFT City to Abu Dhabi’s ADGM. The firm cited tax uncertainty as a key reason for the decision. While it maintains its India operations for other services, the move highlights the ongoing regulatory challenges fund managers face when structuring global investments via GIFT City.
Artha Bharat Investment Managers has moved two of its master funds, the Artha Global Multiplier Fund and the Artha Bharat Absolute Return Fund, from India’s GIFT City to the Abu Dhabi Global Market (ADGM). The asset manager, which currently handles over $800 million in assets, secured a license from the ADGM regulator to operate in the UAE. This shift allows the firm to manage portfolios and advise professional clients in the Middle East with more regulatory clarity.
The core issue prompting this relocation is tax complexity. GIFT City is designed to be an international financial hub, but fund managers often face uncertainty regarding the tax treatment of certain structures. Specifically, Category III funds—which are often used for complex investment strategies—face challenges under existing domestic rules where the tax status of intermediate layers remains unclear. Artha Bharat has previously expressed concerns that these rules could potentially tax the fund itself rather than individual investors, which creates friction for cross-border capital flow.
By moving to the ADGM, Artha Bharat is aligning itself with a jurisdiction that offers a more predictable tax environment for global investors, particularly sovereign wealth funds and family offices based in the Middle East. The firm plans to use an Incorporated Cell Company structure in Abu Dhabi. This format simplifies the management of multiple funds by keeping them under a single, flexible legal umbrella, similar to structures used in established hubs like Singapore.
Despite this partial relocation, the firm remains committed to its Indian presence. Artha Bharat will continue to use its GIFT City setup for its inbound Foreign Portfolio Investment (FPI) services and other third-party management offerings. The change is limited to specific outbound-oriented funds, demonstrating a strategy to balance a domestic base with a global regulatory footprint.
For investors, this development emphasizes the growing competition between financial hubs in the region. While India has made progress in promoting GIFT City as a premier investment destination, operational and tax frameworks remain a critical area for government and regulatory focus. Market participants will likely watch for future policy updates that could streamline tax rules for offshore-focused funds, as these changes are essential to attracting more global capital and preventing similar migrations to competing hubs.