Alternatives, as an investment solution, have been the fastest growing over the past decade. And this year will see the listing of India's first alternatives company, EAAA, and the debut of private credit AIF from Kotak Mahindra AMC
Sebi-registered alternatives—comprising AIFs, InvITs and REITs—have outpaced the growth of mutual funds, and traditional investments such as bank term deposits.
Photo imaging: Chaitanya Dinesh Surpur
The India alternatives market, both statistically and strategically, is emerging as the fastest growing investment tool for individuals and institutions both. They are, of course, growing from a very low base, but the solutions they provide in the private alternatives and public alternatives space cannot be ignored.
The Securities and Exchange Board of India (Sebi)-registered alternatives—comprising AIFs, InvITs and REITs—have outpaced the growth of mutual funds, and traditional investments such as bank term deposits. Alternatives are growing the sharpest: Up 34.1x at 4 percent (as a percentage of GDP at current prices) in FY24, compared to a meagre 0.1 percent 10 years ago, according to data from The Reserve Bank of India, Sebi, Centre for Monitoring Indian Economy and CareEdge Research.
This compares to a de-growth of 0.9 percent for bank deposits, a 2.5x growth for mutual funds and 1.5x growth for portfolio management schemes in the same period. Also, the share of alternatives within the asset management space has increased to 15.8 percent in FY24 from 1.2 percent in FY14, reflecting their rising popularity with investors.
Add to this the fact that EAAA India Alternatives Ltd (formerly known as Edelweiss Alternative Asset Advisors Limited) plans to become the first Indian alternatives company to be publicly listed, possibly signalling the coming of age of the industry.
EAAA India plans to raise ₹1,500 crore through the offer for sale from the promoter (Edelweiss Financial Services Limited, Edelweiss Securities and Investments Private Ltd, Edel Finance Company and Edelweiss Global Wealth Management). It is seen as a move to reduce its debt.
(This story appears in the 24 January, 2025 issue of Forbes India. To visit our Archives, click here.)