AIFs helping mid-sized firms access non-bank capital

Pre-IPO investments via alternative investment funds (AIFs) are gaining traction, as investors seek early access to future market leaders in India's startup ecosystem.

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Vikaas M Sachdeva, managing director, Sundaram Alternate Assets, tells Nesil Staney that AIFs have become attractive among family offices because of their flexibility. Excerpts:

How do AIFs offer differentiated access to India's private market as against traditional mutual funds or PMS?

Alternative investment funds (AIFs) provide access to India's private markets unlike the way conventional mutual funds or portfolio management services (PMS) do. Mutual funds and PMS invest predominantly in listed equities and high-quality debt; AIFs can deploy capital across unlisted equities, private credit, infrastructure, distressed assets and venture capital.

This flexibility enables AIFs to spot value in illiquid, traditionally under-penetrated pockets—from early-stage startups to mid-market businesses—where traditional vehicles are hindered by regulation or liquidity considerations.

What is the outlook for IPO or strategic exits from private equity AIF investments?