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Indian companies are increasingly looking to alternative investment funds (AIFs) to raise capital as the economy expands and businesses seek more funding options, according to Rahul Shah, Managing Partner, Kotak Alternative Asset Managers Limited.
Speaking exclusively to ANI on the sidelines of the 4th CII Alternative Investment Fund Summit 2026 in Mumbai on Wednesday, Shah said growing demand for capital from Indian businesses is helping alternative investment funds become a more established part of the country's financial markets. "In India, because the requirement of capital is growing, inherently because the GDP is growing, you will see that corporates are also increasingly more open to exploring taking capital from AIFs," he said. Alternative investment funds pool money from investors and invest in assets beyond traditional stocks and bonds. They provide capital to businesses through avenues such as private equity, venture capital and private credit. Shah said these investment options are gaining importance as companies look for additional sources of funding, while investors seek to spread their investments across different asset classes. "AIFs are providing options for people to invest into private equity, venture capital and also now increasingly private credit. And that helps in diversifying their asset allocation," he told ANI. The growing role of AIFs is significant as these funds can provide businesses with capital outside traditional bank lending and public equity markets. Private equity and venture capital typically involve investments in companies, while private credit allows businesses to borrow from non-bank investors. Shah also pointed to rising wealth in India as a factor supporting the growth of the alternative investment industry, with investors increasingly exploring options beyond conventional financial products. "The AIF industry is gradually getting into the mainstream, given that investors need more options to invest into as India gets wealthier," he said. "People are not satisfied just with investing into equity and investing into banks and FDs. AIF provides them more options to invest into with a more risk-adjusted return, and that is why it is prospering a lot," he added. Shah further indicated that the expansion of the industry could encourage larger alternative asset management firms to explore stock market listings. "As more managers become bigger, they have their aspirations to also go and list themselves and become an avenue accessible to retail investors," he said. His remarks highlight how growing corporate funding requirements and demand for diversified investment opportunities are helping alternative investment funds gain a larger role in India's financial system. (ANI)
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