India's alternative investment market is set to expand over five-fold to USD 2 trillion by 2034, a report by EY and Julius Baer predicts. This growth is fueled by rising participation from HNWIs and family offices in private markets.
India's alternative investment market could grow more than five-fold to over USD 2 trillion by 2034, as rising participation by high-net-worth investors and demand for higher-yielding, less-correlated assets drive greater capital into private markets, according to a report by EY and Julius Baer.
The report estimates India's alternative investment assets at about USD 400 billion currently, including USD 156 billion in SEBI-registered Alternative Investment Funds (AIFs), with the remainder coming from offshore vehicles, family offices and unlisted structures.
The Rise of Family Offices in Private Capital
The expansion is expected to coincide with a broader change in how Indian family offices deploy capital. The report said they are moving beyond passive investing and increasingly participating as limited partners in private equity and venture capital funds, while also pursuing co-investments and direct investments.
"Family offices have emerged as one of the most transformative forces shaping India's private capital ecosystem," the report said.
Expanding Investment Horizons
The report further noted that family offices are increasingly using their sector knowledge and long-term investment horizon to back emerging businesses and new ventures. Their investment focus is also expanding towards artificial intelligence, climate technology, renewable energy, digital infrastructure, energy storage, semiconductors, electronics manufacturing, cloud services and data centres. Real estate remains an important investment area.
India's Growing Wealth Pool
India's growing wealth pool is supporting this shift. The report noted that the country had more than 19,000 ultra-high-net-worth individuals, with the number projected to exceed 25,000 by 2031. Estimates cited in the report also show that the number of family offices has increased from around 45 in 2018 to nearly 300 by 2024-25.
Future Outlook and Institutionalisation
The report expects family offices to play a larger role in long-term capital formation as their investment strategies become more institutionalised. It said stronger governance, technology, professional talent and data-led decision-making will be increasingly important as these investors expand across alternative funds, private equity, venture capital and pre-IPO opportunities.
(ANI)
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