Preqin and IVCA Launch Benchmark Revealing India's Surging Private Capital AUM

Preqin and IVCA launch a performance benchmark for India's alternative investment funds, revealing $127.1 billion in assets under management as of September 2023. The benchmark covers 474 schemes, providing transparency and insights into India's alternative investment sector.

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Preqin and IVCA Launch Benchmark Revealing India's Surging Private Capital AUM

Preqin and IVCA Launch Benchmark Revealing India's Surging Private Capital AUM

Preqin, a global leader in alternative assets data, and the Indian Venture and Alternate Capital Association (IVCA) have launched a performance benchmark for India's category I, II, and III Alternative Investment Funds (AIFs). The benchmark aims to bring greater transparency to the performance of alternative assets funds within the region.

The benchmark reveals that India-focused private capital Assets Under Management (AUM) have doubled in just five years to reach $127.1 billion as of September 2023. This impressive growth is attributed to India's rising prominence in the global investment landscape, driven by factors such as the standardized Foreign Ownership Limit introduced in 2020, the robust performance of Indian equities, and the relative underperformance of other emerging markets, particularly China.

Why this matters: The growth of India's private capital AUM has significant implications for the global economy, as it indicates a shift in investment flows towards emerging markets. As India continues to attract capital inflows, it may lead to increased economic growth and development in the region, with potential ripple effects on global trade and investment patterns.

The benchmark covers 474 schemes, representing a 35% increase from the 351 schemes included in the previous year's iteration. Fabien Chen, Global Head of Benchmarks at Preqin, emphasized the significance of the benchmark, stating, "The latest iteration of this benchmark... is helping domestic India-based managers gain insights into their fund performance while giving global investors transparency in AIF's performance."

The performance highlights from the benchmark underscore the strength of India's alternative investment sector. Category I AIFs, which include venture capital funds, continue to outperform the Indian public market index, MSCI India TR, as of September 2023. These funds have held up well compared to global venture capital funds, with returns dipping only 3.2% since March 2022, while global VC suffered a more significant decline of 21%.

Venture capital remains the best-performing asset class within India's alternative investment landscape, delivering a median net Internal Rate of Return (IRR) of 21.6% for India-focused funds with vintages between 2013 and 2020. This impressive performance has contributed to the growing interest from global investors, with 48% of surveyed alternative investors now considering India as the most promising emerging market, up from 36% in the previous year.

Preqin offers one of the world's largest selections of alternative benchmarks, with over 100,000 available, spanning more than 40 years of performance data. The launch of the India-focused AIF benchmark in collaboration with IVCA further enhances Preqin's comprehensive coverage of the global alternative assets industry.

The doubling of India-focused private capital AUM to $127.1 billion in just five years, coupled with the strong performance of venture capital funds and the growing investor confidence in India as an emerging market, underscores the country's rising prominence in the global alternative investment landscape. As India continues to attract significant capital inflows and deliver robust returns, the Preqin-IVCA benchmark will serve as a valuable tool for both domestic fund managers and international investors seeking transparency and insights into the performance of India's alternative investment funds.

Key Takeaways

  • Preqin and IVCA launch performance benchmark for India's Alternative Investment Funds (AIFs).
  • India-focused private capital AUM doubles to $127.1 billion in 5 years.
  • Venture capital is the best-performing asset class in India's alternative investment landscape.
  • 48% of surveyed alternative investors consider India the most promising emerging market.
  • Preqin-IVCA benchmark provides transparency and insights into India's AIF performance.