Real estate emerged as the top-performing sector, contributing Rs 75,468 crore, or 17% of the total investments.

The growth in AIF activity has been significantly influenced by Category II AIFs, which encompass a diverse range of investment vehicles such as Real Estate Funds, Private Equity, Debt Funds, and Fund of Funds (FoF). These flexible investment options have become a cornerstone of the sector's expansion, reflecting their tailored approach to meet varied investor needs.

While domestic investors have historically dominated AIF funding, foreign portfolio investors (FPIs) are now playing a more prominent role, particularly in Category II AIFs, where their participation is increasingly on par with domestic contributions.

Key sectoral highlights

Real estate maintained its lead among AIF investments, followed by IT/ITes at Rs 27,815 crore and financial services at Rs 25,782 crore. Other key sectors included NBFCs (Rs 21,503 crore), banks (Rs 18,242 crore), and pharmaceuticals (Rs 17,272 crore).

In the real estate sector, AIFs have emerged as a crucial financing solution, especially through equity-based funding. These funds help bridge the financial gaps that arise at different stages of real estate projects, offering customized funding solutions for construction and long-term development needs. This approach supports developers in managing capital requirements effectively throughout the lifecycle of their projects.

Sectoral AIF Investments (Rs crore) 

Real Estate - 75,468

IT/ITes - 27,815

Financial Services - 25,782

NBFCs - 21,503

Banks - 18,242

Pharmaceuticals - 17,272

Others - 2,29,571

Rapid growth in AIF commitments

The AIF sector has witnessed an extraordinary rise in commitments over the past decade. Commitments surged from just Rs 0.014 lakh crore in FY2013 to Rs 12.43 lakh crore by H1 FY2025. This rapid growth is driven by increasing investor interest in alternative investments.

AIF commitments Raised (Rs lakh crore)

FY13: 0.014

FY18: 1.65

FY23: 8.34

H1 FY25: 12.43