Alternative investment funds (AIFs) witnessed 29% growth in their commitment raised during September quarter.
The commitment raised (roughly equivalent to AUM in MF parlance) has increased to Rs. 65,013 crore in the September quarter from Rs. 50,441 crore in June 2016, shows the latest SEBI data.
The growth was largely due to rising interest in Category I funds, particularly venture capital funds. Category I funds which include infrastructure funds, social venture funds, venture capital fund and SME funds saw a 64% growth in the commitments raised during the September quarter. The commitments raised under this category increased from Rs. 11,500 crore in June to Rs. 18,903 crore in September. Venture capital funds recorded the highest growth, in percentage terms, as their commitments raised increased from Rs. 3,803 crore in June 2016 to Rs. 11,100 crore in September 2016.
Vikas V Gupta, Head - Research & Product Development of Arthveda Fund Management says, The massive growth in venture capital funds is due to rising interest of HNIs in startups. HNIs are looking to invest in e-commerce companies which have high visibility. HNIs are moving from real estate and they are looking for newer avenues of investing like startups.”
Category II funds which are private equity funds, debt funds and fund of funds also witnessed a healthy growth in commitments raised. The commitments raised in this category increased from Rs. 32,696 crore in June to Rs. 38,028 crore in September. Similarly, the commitments raised by Category III AIFs, which are hedge funds, increased from Rs. 6,245 crore to Rs. 8,081 crore during the same period.
AIFs provide flexibility in terms of the investment structure which is preferred by HNIs. In addition, the pass through taxation status has helped the AIF industry grow, says Sriram Iyer, Chief Executive Officer, Wealth Management, Religare Private Wealth.
