IVCA Seeks Pension, Insurance Investment Alternatives as Local Capital Gains Momentum

Indian Venture and Alternate Capital Association Looks to Tap Domestic Capital

The Indian Venture and Alternate Capital Association (IVCA) is exploring ways to deepen participation from pension funds, insurers, and other large domestic institutions in Category II Alternative Investment Funds (AIFs). This move comes at a time when domestic investors have emerged as the dominant source of capital for India's alternatives industry, accounting for 52.7% of commitments to Category I and Category II AIFs.

Industry executives believe that broader participation from pension funds, provident funds, and insurance companies could provide a more stable source of long-term capital for private equity, private credit, and emerging sectors such as deeptech, semiconductors, and advanced manufacturing. This is essential for creating a more stable, long-term funding base for Indian enterprises and reducing dependence on cyclical global capital flows.

According to IVCA, pension funds, provident funds, and insurers collectively manage more than ₹100 lakh crore of assets. However, only a small fraction of this capital currently finds its way into alternative investment vehicles. Category II AIFs, which house a large portion of India's private equity, growth capital, and private credit strategies, have become an increasingly important source of funding for businesses across sectors.

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Commitments to AIFs have grown significantly over the years, from ₹0.84 lakh crore in 2017 to ₹13.49 lakh crore in 2025, highlighting the increasing role of alternative capital in funding Indian businesses.

Industry executives say that actual allocations remain modest relative to the size of the pools available. The recent move allowing government-sector NPS money to allocate up to 1% of assets to AIFs has been viewed as a positive step by the industry, though the overall exposure remains limited.

Insurance companies are also permitted to invest in alternatives but continue to operate within sector-specific investment limits and have largely preferred traditional approved investment categories. For many in the industry, the biggest untapped opportunity remains retirement savings that are still largely absent from the alternatives ecosystem.

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IVCA is working closely with regulators and institutional stakeholders to create a framework that enables a larger share of long-term domestic savings to participate in professionally managed alternative investment vehicles. The industry's broader objective is to mobilize domestic capital into productive sectors of the economy through professionally managed investment vehicles.

"The opportunity today is not driven by a lack of investor appetite, but by the significant headroom that still exists," said Rajat Tandon, president of IVCA.