The alternative assets industry in India is worth $43 billion across private equity, venture capital, real estate, infrastructure, private debt and hedge funds, says a report.
The alternative assets industry in India is worth $43 billion across private equity, venture capital, real estate, infrastructure, private debt and hedge funds, says a report. With 221 private capital fund managers and 46 hedge fund managers based in the country, the alternative assets industry is a small but growing space in India, according to a Preqin report. Compared to other major markets, the alternatives industry in India remains in its infancy, with other countries in Asia-Pacific such as China and Hong Kong notably more established with assets worth ($265 billion) and ($108 billion), respectively. Meanwhile, the number of active private capital firms in the industry has increased annually, indicative of the growing and burgeoning industry in India. Mark O’Hare, Chief Executive at Preqin said that for an explanation, one needs to look at the level of development of the economy, with India having a GDP per capita of $6,600, while China at $15,400 and advanced European and North American economies at $40,000-60,000.
“This in turn highlights the potential growth for India’s alternative assets industry. With GDP growing at 7 per cent per annum, this is likely to deliver a compounded growth in Indian alternative assets over the long term, as alternative assets participation rates in the economy converge on those of more developed economies,” O’Hare added.
According to Preqin, private equity and venture capital (63 per cent) and infrastructure (62 per cent) are the most prominent asset classes among India-based investors. The report further noted that of the India-based institutional investors, 60 per cent invest in at least one alternative asset class.
“This may be indicative of how many investors in India recognise the benefits of exposure to alternatives, which may include low correlation to traditional asset classes, such as equities and fixed income, and the potential for high risk- adjusted returns,” the report added.