Independent asset servicer Dovetail plans to apply for a custody license within 45 days after raising ₹100 crore in fresh capital. The funding supports the company's goal to become a full-service platform for international investors entering the Indian market.
Independent asset servicing firm Dovetail is preparing to enter India's custody business, a move designed to offer a complete service suite for global investors. The company intends to submit its application for a custody license to the regulator within the next 30 to 45 days. This expansion aims to capture growing demand for asset servicing as foreign and domestic capital flows into the Indian market remain strong.
Dovetail currently operates by providing clearing, fund administration, and platform solutions. Management views the addition of custody services as the final piece needed for an integrated service model. As India's market capitalization continues to grow, the firm expects custodial services to become a steady, volume-based revenue source.
Funding and Regulatory Capital
To support this initiative, Dovetail has raised ₹100 crore in a new funding round. This includes ₹70 crore of fresh equity and ₹30 crore generated from a stake sale by existing promoters. According to co-founder Dev Sampat, the company is using these funds to satisfy the regulatory capital requirements for a custody license. While current mandates require ₹50 crore, there are ongoing discussions to potentially raise this limit to ₹75 crore. The company stated that the new funding provides the necessary financial cushion to meet these standards and support broader expansion efforts.
Business Context and Governance
The company was founded by former executives from Kotak and operates independently of large banking institutions. Dovetail manages significant volumes in its clearing division, with daily trade processing averaging 1.5 million transactions and notional derivative volumes near $64-65 billion. Beyond its domestic activities, the firm provides administration services for mutual funds located in GIFT City and manages approximately 40 funds from Singapore.
Dovetail's growth strategy also involves extending its administration services to international hubs, including the UAE, Singapore, and Mauritius. These regions are major contributors to foreign direct investment in India, and the firm aims to leverage its existing infrastructure and compliance frameworks to serve these investment routes. The company’s governance is overseen by a board chaired by former SEBI chairman M. Damodaran, which management believes will support the firm’s credibility during the upcoming regulatory approval process.
For investors and industry observers, the key monitorable will be the progress of the custody license application. The company’s ability to successfully scale its operations in a segment typically dominated by large banking groups will depend on maintaining service quality, achieving operational efficiency, and navigating the evolving regulatory environment for custodial services.