AIF commitments inch to Rs 8.5 trillion in June quarter, shows data

Between April to July, Sebi received 55 applications for AIF registrations

The total commitments garnered by Alternative Investment Funds (AIFs) saw a slight increase to Rs 8.45 trillion at the close of the June quarter, while total investments made exceeded Rs 3.5 trillion for the first time.

AIFs serve as pooled investment vehicles for high-net-worth individuals, investing in various assets such as unlisted companies, startups, real estate, distressed assets, and early-stage ventures, aiming for higher yields. These funds stipulate a minimum investment of Rs 1 crore from investors who fall below a specific net-worth threshold.

The total investment commitments in June edged up from those at the end of March, when they stood at Rs 8.33 trillion. On a year-on-year basis, there has been an impressive jump of over 20 per cent.

As of June 30, the total investment commitments comprised Rs 6.96 trillion for Category II funds, which typically include private equity, debt funds, and funds of funds. Commitments in Category III and Category I reached Rs 85,057 crore and Rs 63,736 crore, respectively.

These committed investments are usually received in tranches from investors by the fund managers and are reflected in the total funds raised.

The total funds raised at the close of June were recorded at Rs 3.74 trillion, out of which Rs 2.7 trillion was raised from Category II AIFs. According to the available data, Rs 3.5 trillion has been invested, marking a growth of around 4 per cent.

Earlier in June, the Securities and Exchange Board of India (Sebi) implemented new measures, mandating the issuance of AIF units in dematerialised form and instituting a standardised approach to the valuation of the investment portfolio. The market regulator also unveiled a framework on the liquidation scheme, aiming to assist AIFs in handling investments that could not be sold due to a lack of liquidity during the winding-up process of a scheme.

Industry experts have expressed that the regulatory tightening has significantly enhanced confidence amongst investors. Between April and July, Sebi has received over 55 applications for AIF registrations, while 13 others have already been approved and are pending payment of the registration fees. This ongoing interest and regulatory vigilance indicate a robust and responsive environment for AIFs in the Indian financial landscape.