After months of subdued fundraising amid geopolitical uncertainty stemming from the West Asia conflict, alternative investment fund (AIF) managers are beginning to see signs of a revival in investor sentiment. Industry participants say allocations that were previously put on hold are now gradually returning, as improving macroeconomic stability and greater clarity on global risks prompt investors—particularly high-net-worth individuals—to re-engage with private market opportunities.
AIFs, which offer investment opportunities in niche segments such as unlisted securities, real estate and even complex trading strategies, usually have a high entry barrier, with a minimum ticket size of ₹1 crore. However, the restrictions are relaxed for accredited investors.
“Some of the investors had kept their allocations on hold to see better clarity emerging from the West Asia war. Given this is largely behind us, investors are returning to private market allocations,” said Dipen Ruparelia, Chief Business & Product Officer, Vivriti Asset Management.
As of March, total commitments in AIFs had neared ₹17 trillion, while fund raises crossed ₹7 trillion for the first time. However, the pace of growth has been impacted in recent months, according to industry players.
Srini Sriniwasan, Managing Director, Kotak Alternate Asset Managers, however, said it may be incorrect to assume there is a blanket slowdown, with investors instead moving towards more proven platforms.
“The reality is that investors have become highly discerning, which is naturally causing a delay in investment decisions. However, capital is not drying up—it is simply taking its time to evaluate risk. As a result, investors will inevitably gravitate towards established platforms with a proven, cross-cycle track record,” he said.
Other industry players noted that while historically AIFs had raised funds on their own, the trend has shifted in recent months, with them now relying more on distributors.
“The distributors are now negotiating harsher terms as fund raising becomes a little difficult. Meanwhile, many family offices have hired talent on their own for VC funds and are managing their own allocations. This also helps them reduce costs. For AIFs, the margins have also been impacted,” said an industry player.
Industry players added that HNIs and UHNIs are considering private credit strategies where the variation in return outcomes is relatively lower, with value creation driven by portfolio construction, strong deal structuring and proactive risk management.
“Funds with greater dependence on overseas capital have felt the slowdown more acutely, while vehicles backed by domestic investors have generally shown greater resilience. If geopolitical tensions ease and market sentiment improves, global capital is likely to return to the ecosystem. In the meantime, the slowdown in capital deployment has had an interesting effect on the market,” said Jashank Pohani, Head – Family Office Relationships, Artha Group, adding that slower deployment has led to early-stage activity becoming more measured, valuations becoming more rational, and founders focusing more on building sustainable businesses than chasing growth at any cost.
In contrast, industry players said that fund flows through GIFT City—the country’s maiden International Financial Services Centre (IFSC)—have continued to remain strong despite the global uncertainty, with a growing number of investors eyeing global markets.
“While we understand the depreciation of the rupee, India has become a large enough economy with sufficient foreign exchange reserves. It is about time Indian investors had exposure to global markets. This allows mitigation of concentration risk. Also, as global markets and investment themes grow, on redemption or sale of securities, funds will come back to the home country itself,” said Mahesh Shekhar, co-founder, Dovetail Group.
In GIFT IFSC, the March quarter saw the number of schemes registered expand to 360 from 327 in the previous quarter. Additionally, the number of investors across fund schemes in the IFSC rose to 9,594 as of March 2026, compared with 6,721 in December 2025. This was driven mainly by a rise in retail schemes, with 3,438 investors, up significantly from 1,239 in December 2025.
Cumulative funds raised increased to $19.51 billion at the end of Q4FY26, up from $17.34 billion in the previous quarter.
