Indian Equity AIFs Delivers 21.5% IRR in Last 10 Years

Equity alternative investment funds (AIFs) in India have delivered an impressive pooled internal rate of return (IRR) of 21.5% between fiscal years 2013 and 2024, according to a news report released on Tuesday, January 14, 2025.

This performance has solidified the importance and resilience of private markets in India’s investment landscape, particularly in the context of recent outperformance over the BSE Sensex Total Return Index (TRI) in the past five fiscal years.

Strong Performance Across Stages

The news report highlighted significant results across different investment stages. Early-stage funds generated a pooled IRR of 26.9% between fiscal years 2013 and 2024, surpassing the BSE 250 Smallcap TRI by 4.29%.

Similarly, growth and late-stage funds achieved a pooled IRR of 23.6% between 2015 and 2024, outperforming the BSE 200 TRI by 5.97%.

Realised Gains and Market Evolution

The distribution to paid-in (DPI) capital ratio, reflecting realized gains for investors, showed that early-stage funds, particularly from fiscal 2014, had a DPI ratio of 1.56, meaning investors received 56% more than their initial investment by March 2024.

Late-stage and big-ticket deals now make up a significant portion of equity market transactions, marking the increasing maturity of India’s private market ecosystem. In fiscal 2024, late-stage deals accounted for 39% of total equity deal value, up from just 18% in fiscal 2014, indicating a market more focused on scalability and predictability.

Big-Ticket Deals Drive Equity Deals

Meanwhile, big-ticket deals, those exceeding ₹500 million, captured 90% of total deal value despite constituting only 28% of the total transaction volume, emphasizing their potential for high returns.

AIFs Drive Growth in Private Markets

AIFs have played a pivotal role in driving private market deals. As of March 31, 2024, total commitments across AIF categories I, II, and III reached ₹11.35 lakh crore, reflecting an astounding 87-fold growth compared to ₹13,000 crore as of March 31, 2014.

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