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Role of AIF Industry in Nation building
Puneet Nanda, MD & CEO, ICICI Venture

Indian market received an all-time record of US$48 billion of private investments in 2019 and roughly a similar amount in 2020. Aggregate private capital investment in 2009-20 period reached US$250 billion. This massive private capital infusion in the Indian economy has been across several segments: healthcare, infrastructure, affordable housing, manufacturing, logistics, IT, financial inclusion, banking, financial services, insurance, consumer products and services, education, etc. Given various constraints faced by the traditional lending ecosystem in the last decade, the role of alternative capital in supporting India’s economic growth aspirations and reducing the strain on government finances has been immense.

The Indian government continues focus on boosting growth and private consumption whilst maintaining the reforms momentum, as also evidenced by Budget 2021. This, along with the surfeit of liquidity in global markets and proclivity for emerging markets such as India gives the confidence that India can expect to remain a beneficiary of private capital flows including through AIFs in the coming decade and perhaps much longer.

ICICI Venture has enjoyed the privilege of being a founding member of the AIF community in India and during the last 32 years of our evolution, we have supported over 500 companies with risk capital. We are pleased to have seen many of them emerge as leaders in various sectors such as insurance, IT, education and vocational training, healthcare, media, manufacturing, sustainable solutions, energy, consumer products and services, affordable housing, etc. We believe 2020 has served as an inflection point for many sectors and companies given rapid digitalization and this theme will prevail in the forthcoming period. We believe financial inclusion will remain a key focus area going forward. We also believe that the credit space will see greater innovation than before. REIT and InvIT markets will see greater activity than before. Affordable housing continues to have a huge run-way for growth. Office sector will see a shift in design and philosophy with wellness and proximity to residential hubs becoming more relevant aspects.

Our objective is to remain at the forefront of innovation within the AIF industry going forward and create appropriate product solutions for various categories of LPs. Across our various business areas, we remain bullish on BFSI, healthcare, consumer products and services, specialty manufacturing, branded apparel, etc. We will also have extra focus on digital, tech in the post pandemic world. In Real Estate, we remain bullish on affordable housing. We feel optimistic about offices but feel Covid will change the narrative from large campuses to mid-sized offices. Other spaces such as logistics, warehousing, data centres could also be interesting. Another could be distressed spaces within realty triggered by Covid. In Infra, energy, clean tech, renewables and transportation will remain important focus areas. Asset monetization initiatives by the Government can also create opportunities. In Special Sits, dislocations in Indian credit markets in the last 3 years would open hitherto untapped opportunities for local AIF Managers like us. In general, there is a clear opportunity for ICICI Venture to grow faster. But competition for third party capital will only intensify and on-going consolidation trends in the global LP community will create a greater thrust on survival of the fittest.

The global alternatives market looks more exciting than ever before. It is estimated that the market will grow from a current size of US$10 Trillion to US$17 Trillion sometime during this decade. PE, Credit will remain two of the fastest growing segments. PE in Asia will witness greater growth in the Buyouts market. 

We feel privileged to be part of a vibrant group such as ICICI which has contributed to nation building for well over 65 years now and we will continue to play a role in strengthening India. ICICI Venture aims to be the preeminent AIF in the domestic market and the preferred partner for entrepreneurs in their growth aspirations.

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