Dovetail eyes custody business; raise ₹100 crore to fund next growth phase

Independent asset servicing firm Dovetail is set to enter the custody business, a move that would complete its ambition of becoming a full-service platform for global investors accessing India.

The company plans to apply for a custody licence within the next 30-45 days, betting on the growing opportunity in asset servicing as foreign and domestic investment flows into India continue to rise.

The company already provides clearing, fund administration and platform solutions, and sees custody as the missing piece in its offering.

With India’s market capitalisation projected to triple to $12 trillion over the next decade, Dovetail sees custodial services as a lucrative, volume‑driven opportunity.

By offering a one‑stop shop—from fund setup and compliance to clearing and custody—the company aims to challenge entrenched banks and position itself as the go‑to gateway for global investors accessing India.

To support this expansion, Dovetail has raised ₹100 crore from a venture capital fund, comprising ₹70 crore of fresh equity infusion and ₹30 crore through a promoter stake sale. The capital will be used to meet regulatory requirements for the custody business, strengthen the balance sheet and support expansion into new markets.

“We will apply for the custody licence over the next 30-45 days. Regulatory capital requirements stand at ₹50 crore, with discussions to raise this to ₹75 crore. The fresh funds ensure we are well-prepared,” said co-founder Dev Sampat.

Founded by former Kotak executives, Dovetail has built a business model independent of large banking groups. Its clearing business processes 15-16 lakh trades a day, with average notional derivative volumes of $64-65 billion.

Beyond clearing, Dovetail administers mutual funds in GIFT City, manages around 40 funds out of Singapore, and has received approval for third-party fund management solutions.

The company now plans to expand its administration business into new jurisdictions such as Mauritius and the UAE, while strengthening its presence in Singapore and Dubai’s DIFC.

Mauritius, despite declining as a foreign portfolio investment hub, still accounts for 20 per cent of India’s FDI inflows, alongside Singapore’s 30 per cent. Capturing these flows with substance‑based operations and compliance expertise is central to Dovetail’s strategy.

According to co-founder Mahesh Shekdar, the fundraise is not only about capital but also about strengthening the company’s credibility as it expands internationally. “We are profitable with a strong net worth, but institutional money brings validation and confidence as we enter more jurisdictions,” he said.