India’s investment ecosystem is evolving rapidly, with private market investing emerging as a powerful alternative to traditional public equities. At Fiducrest, based in GIFT City, we are focused on delivering these opportunities through Pooled Investment Funds and Separately Managed Accounts (SMAs), specifically targeting Category II Alternative Investment Funds (AIFs). This approach positions us—and our investors—at the leading edge of India’s alternative investment revolution.
Private market investments offer access to high-growth companies, private debt, real assets, and special situations not available in public markets. They enable investors to participate in India’s economic transformation at an earlier stage, often capturing greater value and diversification.
The Category II Advantage
Category II AIFs are permitted to invest in a wide range of opportunities, including:
-
Unlisted equity and debt
-
Listed debt securities rated ‘A’ or below
-
Units of other Category I or Category II AIFs
Recent regulatory changes have further expanded the investment universe for Category II AIFs, allowing them to allocate more than 50% of their corpus to unlisted securities and listed debt, providing flexibility to pursue higher-yielding, less liquid opportunities.
Regulatory Tailwinds and Compliance
The Securities and Exchange Board of India (SEBI) has introduced significant updates for Category II AIFs, effective from October 2025, focusing on:
-
Enhanced due diligence, especially when a large portion of the fund corpus comes from a limited pool of investors
-
Mandatory dematerialization of holdings, improving transparency and investor protection
-
Stricter custodial oversight and reporting to ensure compliance and safeguard investor interests1
These measures are designed to boost transparency, standardize industry practices, and align with other regulatory frameworks (like FEMA and RBI guidelines), making the Category II AIF space more robust and attractive for sophisticated investors.
Why Fiducrest: Pooled Investment Funds & SMAs
At Fiducrest, our offerings are tailored for investors seeking:
-
Pooled Investment Funds: Diversified exposure to private market opportunities, managed by experienced professionals under a regulated structure.
-
SMAs: Customized portfolios, offering direct ownership and tailored strategies within the Category II AIF framework.
Both structures benefit from the flexibility, transparency, and risk-adjusted return potential that Category II AIFs provide.
Opportunities Beyond Public Equity
| Opportunity Type | Description |
|---|---|
| Private Debt | Access to high-yield, lower-rated listed and unlisted debt instruments5 |
| Growth Equity | Investment in unlisted, high-growth companies before public listing |
| Special Situations | Capitalizing on restructuring, distressed assets, and other unique market events |
| Real Assets | Exposure to real estate, infrastructure, and other tangible assets through private vehicles |
-
Liquidity: Investments are typically medium- to long-term, with limited early exit options.
-
Risk-Return Profile: Higher return potential comes with increased complexity and the need for robust due diligence.
-
Compliance: Investors benefit from enhanced protections, but must navigate evolving regulatory requirements.
Conclusion
The rise of private market investing in India marks a new era for sophisticated investors. With Category II AIFs at the center of regulatory innovation and opportunity, Fiducrest’s Pooled Investment Funds and SMAs offer a gateway to the next wave of wealth creation—beyond the boundaries of public equity.
To learn how Fiducrest can help you access the best of India’s private markets, connect with our team today.
