Indian insurance companies invest less than 2% of their assets in alternative investments, compared with around 20% in overseas markets, highlighting significant scope for domestic institutional investors to increase their participation in funds that finance infrastructure, businesses and other long-term projects, according to Aashwin Dugal, CEO of Nippon Life India AIF Management Ltd.
Speaking exclusively to ANI on the sidelines of the 4th CII Alternative Investment Fund Summit in Mumbai on Wednesday, Dugal said India's alternative investment fund (AIF) industry was still relatively small compared with developed markets, where insurance companies, pension funds and sovereign wealth funds play a major role in financing investments.
Indian insurers invest under 2% of assets in alternative investments, compared to ~20% overseas, showing substantial growth potential for domestic institutional funding in long-term projects, according to Nippon Life India AIF Management CEO Aashwin Dugal.
Speaking to ANI at the 4th CII AIF Summit, Dugal noted India's AIF industry remains small relative to developed markets. However, institutional participation is rising as investors gain experience across market cycles.
"Insurance companies overseas today would be investing about 20% of their AUM in alternates. That percentage in India is less than 2%," he said, adding that growing participation from long-term investors and pension funds will build confidence and help finance India's economic growth.
He also highlighted the role of pension funds, saying regulatory changes allowing investments in private credit were helping build confidence in the sector. "I think you are now seeing more confidence and more money coming into this space," Dugal added.
"Credit underwriting will be very critical. Companies that you're lending to, measuring risk and managing that risk is going to be extremely important," he said. Dugal said India's alternative investment industry had already matured considerably and was likely to play a more meaningful role in financing businesses over the next 10 to 15 years. - ANI
