Equity Alternative Investment Funds in India Achieve Strong Pooled IRR, Surpassing Sensex
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Synopsis
Equity alternative investment funds in India show strong performance with a pooled IRR of 21.5% from 2013 to 2024, surpassing the Sensex and highlighting the resilience of private markets.
Key Takeaways
- 21.5% pooled IRR achieved by AIFs from 2013-2024.
- Early-stage funds generated a 26.9% pooled IRR.
- Growth and late-stage funds delivered 23.6% pooled IRR.
- Late-stage deals made up 39% of total equity deal value in 2024.
- Total AIF commitments reached Rs 11.35 lakh crore.
New Delhi, Jan 14 (NationPress) Equity alternative investment funds (AIFs) in India have recorded an impressive pooled internal rate of return (IRR) of 21.5% from fiscals 2013 to 2024, as reported on Tuesday.
Over the last five fiscal years, this benchmark has outperformed the BSE Sensex Total Return Index (TRI), underscoring the strength and significance of private markets within India’s investment framework, as indicated in the second edition of the Crisil-Oister report.
Breaking it down by stage, early-stage funds achieved a pooled IRR of 26.9% during the same period, exceeding the BSE 250 Smallcap TRI by 4.29%.
In a similar vein, growth and late-stage funds demonstrated a solid pooled IRR of 23.6% from fiscals 2015 to 2024, outperforming the BSE 200 TRI by 5.97%, as highlighted in the report.
“This year's findings reaffirm our long-standing view that private capital is not just involved in India's growth narrative but is actively shaping it,” stated Sandeep Sinha, Co-CEO of Oister.
In fiscal 2024, private markets once again showcased their capacity to excel and lead through sustained growth and sectoral innovation, establishing a standard for resilience, scale, and creativity, he added.
The distribution to paid-in (DPI) capital ratio illustrates the gains realized by investors. The benchmark from the earliest vintage, fiscal 2014, recorded a DPI ratio of 1.56, indicating that investors received 56% more than their original investment (as of March 2024).
Late-stage and high-value deals represent a significant portion of private market equity transactions, highlighting the growing sophistication of India's private market ecosystem.
In fiscal 2024, late-stage deals constituted 39% of the total equity deal value, a rise from 18% in fiscal 2014, indicating a market increasingly focused on scalability and reliability.
Conversely, high-value transactions, defined as those exceeding Rs 500 million, accounted for 90% of the overall value while making up only 28% of the total transaction volume, emphasizing their capacity to yield significant returns.
AIFs were key drivers in private market transactions, with total commitments across categories I, II, and III reaching Rs 11.35 lakh crore as of March 31, 2024, reflecting an astounding 87-fold growth since March 31, 2014.
Jiju Vidyadharan, Senior Director at Crisil, remarked that private markets have been instrumental in nurturing innovation, with AIFs playing a crucial role in directing private capital towards new-age companies and startups.
