Alternative investing in India: trends, challenges, and outlooks

Abstract

India’s alternatives investment industry has grown leaps and bounds, over the past couple of decades and even in the past five years. According to alternatives data vendor Preqin (in association with the Securities and Exchange Board of India- SEBI), Indian AIFs (Alternative investment funds) have increased total capital commitments from ~$10bn by 2016 to ~$100bn by 2023, a roughly 10x growth. When we look at India against global peers, even in a mature asset class such as Private Equity, India has grown far ahead of APAC peers in terms of investment intensity (deal flow as a % of GDP) and even close to western, developed market peers. A strong business environment, policy support for alternatives, promoter mindset shift towards accepting external equity and a booming stock market has provided the required lubricant for alternative investing to flow in India. In this paper, we attempt to thoroughly explore the three most prominent asset classes in the Indian alternative investing space – Private Equity, Real Estate and Venture Capital.