Slowdown in AIFs growth story

After witnessing healthy growth in terms of commitment raised for many quarters, the Indian AIF industry has witnessed a slowdown in April-June 2019. In fact, AIFs witnessed 3% increase in commitment raised compared to January-March 2019.

SEBI’s latest data shows that the commitment raised (equivalent to AUM in MF parlance) as on June 2019 has increased to Rs.2.90 lakh crore from Rs.2.82 lakh crore in the previous quarter. The commitments raised stood at Rs. 2.17 lakh crore in the corresponding period last fiscal.

Experts attribute this to introduction of higher surcharge on super rich. Andrew Holland, CEO, Avendus Capital said that this was due to introduction of higher tax for HNIs. He, however, expects that the growth would revive in the coming quarters as the government has withdrawn higher surcharge imposed on super rich.

Another reason was lackluster performance of equity market. Rehan Yar Khan, Managing Partner at Orios Ventures Partners told Cafemutual that the weak sentiment in equity markets in April-June quarter has affected the flows in commitments raised in AIFs.

SEBI data shows that the commitments raised in Category 2 funds, which invest in private equity, structured debt and stressed debt have grown from Rs. 2.05 lakh crore in March 2019 to Rs.2.08 lakh crore in June 2019, nearly 1% growth in its AUM.

Similarly, Category 3, which includes long short funds, long only funds and hedge funds, saw a jump of 9% in its commitments. The commitment raised in this category has gone up from Rs. 43,255 crore in March 2019 to Rs. 47,055 crore in the June quarter.

Category 1 recorded a marginal growth of 4% in commitments raised. Category 1 AIFs invest in start-ups or early stage ventures, social ventures, SMEs or infrastructure funds. This category has raised commitments worth Rs. 34,978 crore as on June 2019 as against Rs. 33,534 crore as on March 2019.