India’s Alternative Investment Funds (AIFs) have experienced substantial expansion, with total commitments surpassing $149.25 billion as of December 2024, marking a 5% quarter-over-quarter growth, according to SEBI. AIFs secured $60.51 billion in fundraising, while total investments exceeded $57.41 billion. This growth is largely fueled by high-net-worth individuals (HNIs) and institutional investors diversifying their portfolios.
Category II AIFs, covering sectors such as private equity, real estate, and distressed asset funds, reached a milestone by crossing $114.81 billion for the first time. Meanwhile, private credit has seen remarkable progress, now accounting for 15% of total AIF commitments at $22.39 billion—rising significantly from just 6% five years ago. A sign of this growing demand, Vivriti Asset Management successfully raised $551.09 million for private credit strategies.
While real estate investments dipped slightly from $8.61 billion to $8.48 billion, funding for IT and IT-enabled services (ITeS) climbed to $3.48 billion. Additionally, financial services saw an uptick, reaching $3.08 billion. Within Category I AIFs, angel funds secured commitments of $998.85 million.
In a move to broaden investor participation, SEBI is considering allowing Accredited Investors (AIs) to be categorized as Qualified Institutional Buyers (QIBs). Notably, 65% of AIF investments are in unlisted assets, filling the lending gap left by traditional financial institutions that have reduced mid-market corporate lending. This has positioned private credit funds as crucial players, offering risk-adjusted returns and stable income opportunities.
As market uncertainties persist, HNIs and institutional investors are expected to channel more capital into AIFs, strengthening their role in India’s evolving financial landscape.
