Speaking at the IVCA Conclave 2026, a flagship annual event of the Indian Venture and Alternate Capital Association (IVCA), Pandey said that non-accredited investors can participate in AIFs, but only by meeting the prescribed minimum investment threshold of Rs 1 crore. In contrast, accredited investors are not subject to this minimum investment requirement.
“The accredited investors must themselves be financially sound and have a net worth of an order which is required,” the Sebi chief said.
India now has more than 1,700 registered AIFs. As of December 2025, commitments stood at about Rs 15.74 lakh crore, while investments were around Rs 6.45 lakh crore, reflecting a CAGR of nearly 30% over the past five years.
The AIF industry is not only attracting commitments but is also converting a growing share of these commitments into actual investments, putting significant capital to work in the economy. At the same time, with commitments nearing Rs 16 lakh crore, there remains substantial capacity for future deployment, he said.
While AIFs are supporting growth today, they are also paving the way for the next wave of entrepreneurship, infrastructure development and enterprise expansion. They help channel capital to areas where traditional finance may not reach and strengthen the link between private capital and productive enterprise.
He also highlighted a few challenges. One key concern is mis-selling and product suitability. AIFs are designed for sophisticated investors as they involve illiquid assets, long holding periods, complex structures and differentiated risk-return profiles. The potential for higher returns, therefore, cannot be separated from the disclosure of higher risks. Managers and distributors must clearly communicate key terms, and risk profiling should be treated as a serious exercise rather than a mere formality.Another issue is whether sufficient capital is being directed toward growth, innovation and sunrise sectors. AIFs were expected to fund uncertainty, innovation and early-stage enterprises. However, as of December 31, 2025, only about Rs 205 billion of AIF capital has been invested in start-ups. If private capital remains overly conservative, a core objective of the AIF framework risks being diluted. The industry has the opportunity to play a larger role in supporting innovation-led sectors and emerging businesses.
Valuation discipline is also critical. AIFs frequently invest in early-stage and illiquid assets, where credibility depends heavily on transparent and robust valuation practices. Weak or opaque valuation frameworks can erode investor confidence, particularly when investee companies eventually move toward public markets.
Alternative Investment Funds (AIFs) are privately pooled investment vehicles regulated by the Securities and Exchange Board of India in India. They invest in non-traditional asset classes such as hedge funds, private equity and startups. Typically designed for high-net-worth individuals and institutional investors, AIFs require a minimum investment of Rs 1 crore and offer specialised strategies that often carry higher risk and return potential compared with traditional investments like stocks and bonds.
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