Cayman FPIs increase stakes in Indian firms
- FPI from the Cayman Islands jumped to ₹33,242.24 crore in 62 NSE-listed firms by the end of FY21 from ₹8,732.53 crore in 28 listed Indian companies at the end of FY18, data compiled by Prime Database showed.
Foreign portfolio investments (FPI) routed through the Cayman Islands nearly quadrupled in the past four years, making the Caribbean tax haven India’s second-largest source of FPI after Mauritius.
FPI from the Cayman Islands jumped to ₹33,242.24 crore in 62 NSE-listed firms by the end of FY21 from ₹8,732.53 crore in 28 listed Indian companies at the end of FY18, data compiled by Prime Database showed. The data covers only those companies where an individual FPI holds over more than 1%.
The Cayman Islands is popular among funds investing worldwide and not just in India, said Rajesh Gandhi, partner, Deloitte India. “US investors are particularly comfortable with using a Cayman vehicle for their overseas investments. The Cayman regulations and the ecosystem provides an attractive framework to mostly hedge funds, private equity and closed-ended alternative investment funds (AIFs),” he said.
“The Cayman Islands continues to be the leading offshore domicile for hedge funds with close to 11,000 active mutual funds and registered closed-ended private funds,” Gavin Gray, country head of Cayman Islands at Sanne Group PLC, a global provider of alternative asset and corporate services.
Among listed Indian companies, IndusInd Bank had the highest Cayman FPI of 12.83% at the end of FY21, up from 1.13% in FY18. Next is Lemon Tree Hotels, with 9.05% in March 2021 from 2.06% in the same period of 2019 and no holding in March 2018.
Three other companies with top exposures to Cayman FPI are Tata Communications Ltd (8.10%), Time Technoplast (7.93%) and GMR Infrastructure (7.27%). At the end of FY21, there were 20 Cayman FPIs that invested in just one firm in India.
A Business Standard report said that the market regulator is watching Mauritius and Cayman FPIs that may not have provided adequate information about their ultimate beneficial owners. There are concerns that a number of such funds could have a high non-resident Indian holding and are used by promoters for round-tripping.