Alternate investment funds invest ₹5 lakh crore in India

Mumbai

Alternate Investment Funds (AIFs) have invested ₹5.06 lakh crore in India during April to December 2024, with the real estate sector receiving the highest share, according to Anarock Research.

Real estate attracted ₹73,903 crore—15% of total net AIF investments—marking an 8% rise from ₹68,540 crore at the end of FY24. AIFs are privately pooled funds that invest in areas like real estate, private equity, and hedge funds, providing high-risk, high-reward options for seasoned investors.

Other sectors seeing significant AIF inflows include IT/ITeS, Financial Services, NBFCs, Banks, Pharma, FMCG, Retail, and Renewable Energy.

The number of AIFs has surged 36 times over a decade, from just 42 in 2013 to 1,524 by March 5, 2025. Capital commitment to these funds has grown at an annual rate of 83.4% between FY13 and FY25.

Prashant Thakur of Anarock Group said that AIFs are emerging as flexible funding sources, especially for real estate, where traditional funding faces challenges. By drawing capital from both domestic and foreign investors, AIFs offer a sustainable financing route.

Category II AIFs, which include private equity funds, are driving the surge, contributing around 80% of AIF funding over the past five years. While domestic investors dominate, foreign investors—particularly in Category II—have achieved near-equal participation.

Looking ahead, experts predict greater use of blended finance, AI-driven risk tools, and simplified regulations to enhance AIF impact and reach.