The report highlights that the aggregate benchmark of alternate investment funds (AIF) investing in private markets delivered an alpha of 13.5% over the public market equivalent, S&P BSE Sensex. Further, more than 75% of funds examined as a part of the report have generated a positive alpha.
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In investing terms, alpha refers to excess returns earned on an investment above the benchmark return.
As a part of the report, CRISIL took an analysis of 217 funds (AIFs) belonging to vintages between fiscal years 2013 to 2022, investing in private markets.
The report comes at a time when Indian technology startups recorded a steep fall in calendar year 2023, with new age ventures raising merely $7 billion in equity funding, marking a seven-year nadir for the sector.
“The performance of the private markets has been heartening. With AIFs coming in, the startup industry is still young (10-12 years old) compared to the US and still has consumed $100 billion in capital, which is 9% of India’s total capital requirement – showing the opportunity funds are seeing in the (new-age technology) space,” said Rohit Bhayana, cofounder of Oister Global told ET.
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Bhayana expects that in spite of the so-called funding winter, investments in private technology companies is expected to grow to $600 billion over the next five years, he added. “We see that of the $600 billion that will be consumed by Indian startups in the next five years, $100 billion will come from non-institutional investors and high-net worth individuals,” added Bhayana.