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SEBI Reports Record Growth in AIF Commitments: A 44% Increase YoY

SEBI Reports Record Growth in AIF Commitments


SEBI Reports Record Growth in AIF Commitments: A 44% Increase YoY

The second day of the IVCA Conclave 2024 featured a dynamic fireside chat between Shri Ananth Narayan Gopalakrishnan, a Whole-Time Member of the Securities and Exchange Board of India (SEBI), and S. Sriniwasan, Managing Director of Kotak Alternate Assets. Shri Gopalakrishnan shared some significant insights into the Alternative Investment Funds (AIF) industry, highlighting a remarkable growth in commitments.

Shri Gopalakrishnan announced that the total commitments in the AIF industry have reached 10.8 lakh crores, representing a substantial 44% increase year-on-year. Despite challenges such as the funding winter, the AIF industry continues to thrive. He also mentioned that actual investments have touched 4 lakh crores, showing a compounded annual growth rate of 35% over the last five years. The AIF ecosystem now boasts approximately 1.4 lakh investors.

Breaking down the data, Shri Gopalakrishnan noted that in terms of commitments, the industry is evenly split between foreign and domestic sources. However, in terms of actual investments, the majority, about 65%, comes from domestic sources. He also highlighted that actual investments for funds closed from 2012 to date amount to only about 60–65% of the commitments. Additionally, he pointed out that only about 7% of the actual investments go into startups, as defined by the Department for Promotion of Industry and Internal Trade (DPIIT).

Addressing regulatory concerns, Shri Gopalakrishnan emphasized the need for a collaborative approach. He acknowledged a key concern among policymakers and regulators regarding the use of the AIF structure to circumvent existing financial sector regulations. He stressed the importance of maintaining trust in the ecosystem while facilitating productive capital formation.

In response to industry concerns, Shri Gopalakrishnan announced SEBI’s plans to address certain issues. For instance, SEBI is proposing to do away with the onerous liquidation scheme and instead implement checks and balances to ensure concerns around valuations and performance are addressed. Additionally, SEBI is proposing to allow AIF investments into infrastructure Special Purpose Vehicles (SVPs) for raising debt, and in collaboration with the Reserve Bank of India (RBI), a special situations fund will be launched.

Shri Gopalakrishnan’s insights at the IVCA Conclave underscore the continued growth and resilience of the AIF industry in India, as well as SEBI’s commitment to addressing regulatory concerns while fostering a conducive environment for investment and capital formation.

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