Alternative Investment Funds as an asset class has seen a 38 percent jump in commitments raised from domestic investors, highlighting the rise of investment in private funds
Minimum investment limit to invest in an AIF is ₹1 crore, as Sebi wants sophisticated investors who understand the underlying risk of such kind of investments
Illustration: Chaitanya Dinesh Surpur
Before the pandemic, the riches were busy catching up over coffee and dropping names of the new startup they have invested in. Almost everyone believed that they had invested in a multi-bagger, but then came the pandemic, and the hoity angels’ crowd progressed to become sophisticated investors, or so the Securities and Exchange Board of India (Sebi) defines investors who invest in alternative investment funds (AIF).
As per Sebi data, as on December 30, 2021, fund managers who run AIFs raised a total of ₹609,091.7 crore across categories—a 38 percent jump from what they had raised the year before. In December 2020, the figure was ₹441,994.73 crore.
The minimum investment limit to invest in an AIF is ₹1 crore, as Sebi wants sophisticated investors who understand the underlying risk of such kind of investments.
“The rise in AIF allocation is mainly driven by clients wanting to participate in private markets through both private equity (PE) and private debt. Most clients are also investing in AIFs, which invest primarily in listed equities as these are more focussed or thematic, and are more benchmark-agnostic as compared to mutual funds.
Allocation to PE has been driven by client eagerness to participate in the new-age disruptive tech companies. Most of these companies are unlisted and only available through the AIF route,†says Sahil Kapoor, senior executive vice president at IIFL Wealth. IIFL Wealth distributes more than ₹27,000 crore of AIFs on the platform, including listed equity, unlisted equity, real estate and structured credit.
(This story appears in the 08 April, 2022 issue of Forbes India. To visit our Archives, click here.)