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SEBI data shows that the commitment raised or AUM in MF parlance of the AIF industry recorded growth of 36% in one year to reach AUM of Rs.11.35 lakh crore in March 2024. In March 2023, its AUM was Rs.8.34 lakh crore.
Cat II AIFs witnessed highest growth in absolute terms. Its AUM grew by 32% to reach Rs.9.12 lakh crore. Real estate funds, private equity and debt funds and funds for distressed assets are some of the funds in Cat II AIFs.
Lakshmi Iyer, CEO-Investment & Strategy, Kotak Alternate Asset Management attributes this to the availability of innovative strategies and structures in private credit and venture debt funds. These two categories have been offering excellent diversification option to HNIs, she said.
Paresh Parikh, Head of distribution at Ashmore (India) said that higher returns in private debt funds helped cat II AIFs gain more traction. Also, many HNIs use private debt fund to generate quarterly income, he added.
In percentage terms, Cat III AIFs, which include long short funds and long only funds witnessed highest growth of 79% in one year. The commitment in this category grew from Rs 80,900 crore in March 2023 to Rs 1.45 lakh in March 2024.
Deepak Jaggi of Satco Wealth said that hedge funds gained popularity among Indian wealthy. He pointed out that category III AIFs are taxed at fund level and hence, it is more tax friendly for them compared to debt funds, which are taxed at marginal rate of taxation. For HNIs, such a taxation can go up to 43% of the total capital gains.
Cat I AIFs, which invest in startups through venture capital funds and run strategies like infrastructure funds and SME funds, social impact funds, special situation funds recorded growth of 30% in one year in its commitment. Its AUM grew to Rs.77,000 crore in March 2024.
Let us look at the table to know more.
|
March 2024 |
March 2023 |
||||||
|
Category of AIF |
Commitments |
Funds |
Investments |
Category of |
Commitments |
Funds |
Investments |
|
Category I |
|
|
|
Category I |
|
|
|
|
Infrastructure |
18,850 |
8,467 |
5,450 |
Infrastructure |
15,581 |
5,466 |
4,743 |
|
SME fund |
1,169 |
714 |
624 |
SME fund |
149 |
62 |
52 |
|
Social impact |
2,120 |
735 |
453 |
Social venture |
1,473 |
565 |
331 |
|
Special situation fund |
1,372 |
1,166 |
1,068 |
- |
- |
- |
- |
|
Category I AIF - VCF |
7,053 |
3,829 |
3,343 |
- |
- |
- |
- |
|
Venture capital fund |
46,301 |
25,880 |
21,584 |
Venture capital |
41,726 |
22,191 |
18,886 |
|
Category I Total |
76,865 |
40,790 |
32,523 |
Category I Total |
58,929 |
28,283 |
24,013 |
|
Category II |
9,12,903 |
3,21,227 |
2,76,033 |
Category II |
6,93,945 |
2,66,296 |
2,42,915 |
|
Category III |
1,45,132 |
89,950 |
98,491 |
Category III |
80,900 |
71,030 |
71,055 |
|
Grand Total |
11,34,900 |
4,51,967 |
4,07,047 |
Grand Total |
8,33,774 |
3,65,609 |
3,37,983 |
Clearly, AIFs have been gaining popularity among wealthy clients. To help you understand growth and opportunity in the AIF space, Cafemutual is set to hold CafeAlt Conference 2024 on August 23 at Taj Santacruz, Mumbai.
There will be many discussions around future trends and opportunities in private equity, private debt, venture capital and Gift City to help you navigate through the growing AIF category.
Click here to register.