Alternative investment funds (AIFs) have seen a compound annual growth rate (CAGR) of 30% over the past five years in terms of commitments and investments, according to Ananth Narayan, whole-time member at the Securities and Exchange Board of India (SEBI).
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Speaking at the Capital Markets Conclave organized by the Confederation of Indian Industry (CII) in Kolkata on July 17, Narayan said that the rise of AIFs, which are primarily focused on unlisted investments, has gone relatively unnoticed."
Speaking at the Capital Markets Conclave organized by the Confederation of Indian Industry (CII) in Kolkata on July 17, Narayan said that the rise of AIFs, which are primarily focused on unlisted investments, has gone relatively unnoticed.
As of March 2025, total commitments to AIFs stood at Rs 13.5 lakh crore ($156.85 billion), increasing by over Rs 1.7 lakh core from the previous year. Narayan called this "an order of magnitude comparable to the funds flowing into equity mutual funds."
Notably, FY25 saw record inflows into equity mutual funds at Rs 4.17 lakh crore, more than double the Rs 1.8 lakh crore in FY24.
Category II AIFs rise in popularity
As of March 31, 2025, Category I AIFs, which include venture capital and angel funds, drew the least share of commitments at Rs 89,083 crore, according to data on SEBI's website. Within Category I, venture capital funds led with Rs 51,794 crore in commitments, followed by infrastructure funds and angel funds at Rs 19,650 crore and Rs 10,138 crore, respectively.
On the other hand, Category II AIFs, which include private equity and real estate funds, registered the highest share of commitments at Rs 10.3 lakh crore.
Meanwhile, Category III AIFs, focused on complex trading strategies and leverage, saw Rs 2.29 lakh crore in commitments.
Of the total commitments, actual funds raised stood at Rs 5.6 lakh crore and investments made were at Rs 5.4 lakh crore.
PE turnaround
In the first quarter of this calendar year, PE deal activity showed "early signs of recovery", according to VCCircle's Quarterly Deals Update. The quarter saw deal value rising 40% year-on-year and 49% quarter-on-quarter.
PE activity "experienced a remarkable turnaround, with deal volume doubling and deal value surging 2.4x", the report said. This was the highest growth across categories, including venture capital, angel funds, and public capital deals.
Meanwhile, angel/seed deals continued to lead by deal count at 194, while venture capital dominated in terms of deal value at $2,395 million.
