Indian firms shifting to AIFs for capital, says Kotak's Rahul Shah
Rahul Shah of Kotak Alternative Asset Managers explains why Indian corporates are shifting toward AIFs for private equity and credit.
As the Indian economy continues its rapid expansion, domestic companies are increasingly moving away from traditional funding routes and turning toward alternative investment funds (AIFs) to fuel their growth. This shift marks a significant evolution in how Indian businesses access the capital necessary to scale operations in a growing GDP environment.
Speaking at the 4th CII Alternative Investment Fund Summit 2026 in Mumbai, Rahul Shah, Managing Partner at Kotak Alternative Asset Managers Limited, highlighted that the rising demand for capital is making AIFs a permanent and established fixture in the nation's financial landscape.
A New Era of Corporate Funding
The surge in AIF usage is directly linked to India's economic trajectory. According to Shah, as the country's GDP grows, the inherent requirement for capital rises, prompting corporates to explore more diverse and sophisticated funding avenues.
Unlike traditional bank loans or public equity markets, AIFs offer a variety of specialized mechanisms to inject liquidity into the economy, including:
- Private Equity: Direct investments into companies to support long-term growth.
- Venture Capital: Funding for high-growth potential startups and innovative enterprises.
- Private Credit: Allowing businesses to borrow from non-bank investors, providing a vital alternative to conventional lending.
Diversification Driven by Rising Wealth
The growth of the AIF sector is not just a boon for corporations; it is also being propelled by a changing investor mindset. As wealth accumulates across India, investors are no longer satisfied with the limited returns offered by traditional products like fixed deposits (FDs) or standard equity markets.
"People are not satisfied just with investing into equity and investing into banks and FDs," Shah noted. He explained that AIFs provide a way for investors to achieve more risk-adjusted returns by diversifying their portfolios across different asset classes.
The Future: Mainstream Integration and Potential Listings
As the industry matures, it is moving from the fringes toward the mainstream. Shah indicated that the increasing scale of alternative asset management firms could lead to a new trend in the financial markets: public listings.
As these management firms grow in size and influence, many may aspire to list themselves on stock exchanges. Such a move would not only solidify their position in the market but also create a new avenue for retail investors to gain exposure to the alternative investment space.