Indian family offices are moving from informal, deal-by-deal investing to structured portfolio construction. Between 2018 and 2024, the number of organised family offices in India increased from roughly 45 to nearly 300, reflecting both large liquidity events and a growing focus on wealth creation across generations . Today, Indian family offices are estimated to oversee close to $30 billion in assets, capital that is increasingly being deployed with a long-term, risk-aware mandate rather than short-term return targets .
Growth in Category I AIF Capital (FY21–FY25)
Table: Cumulative funds raised by Category I Alternative Investment Funds (₹ crore). Source: SEBI AIF Statistics.
(Source: SEBI (reported by Business Standard). Data from December 2021 to December 2025; figures denote cumulative AIF capital deployed across Categories I–III.)
This shift is reshaping asset allocation. Alternatives now account for around 40–55% of portfolios for many Indian family offices, driven by the need to reduce dependence on public equity cycles and improve downside resilience. Within this alternatives bucket, Alternative Investment Funds have emerged as the preferred structure, offering regulated access to private markets, professional manager selection, and clearer governance than direct private investing.
Category I AIFs are gaining relevance as families seek long-term growth exposure through SMEs and early-stage companies while maintaining portfolio discipline. This shift is reflected in steadily rising AIF assets under management, which have increased consistently over the past five years, from ₹50,259 crore in FY21 to nearly ₹98,000 crore till December 25, as per SEBI data. Funds such as Alpha AMC’s Category I AIF are therefore increasingly being evaluated as focused satellite allocations within a broader, diversified family office portfolio.
Why AIFs Have Become Core to Family Office Portfolios
Why AIFs fit the brief for multi-generational investors is straightforward. They combine professional manager selection, institutional governance, and relative tax efficiency versus ad hoc direct holdings. Under SEBI’s framework, AIFs are clearly classified into three categories: Category I, which focuses on early-stage, SME, and socially desirable investments; Category II, which covers private equity and private credit strategies; and Category III, which permits hedge-style and derivatives-enabled approaches .
Allocation math matters. Recent market analysis shows family offices in India and the region are allocating north of 40% of their portfolios to alternatives, with several surveys indicating that alternatives exceed 50% for the most sophisticated families. The implication is simple but powerful: public markets alone cannot deliver the diversification, private-market alpha, or capital-formation exposure that long-horizon families increasingly demand.
Risk governance is not optional. Family offices use AIFs to outsource underwriting while retaining structural control. A well-constructed Category I AIF enforces deployment discipline, limits leverage, and embeds investor oversight mechanisms. These controls reduce headline risk and provide access to curated deal flow and diversified exit pathways. For families concerned about succession planning and tax leakage, AIFs also simplify ownership structures and exits compared with managing dozens of bilateral minority shareholdings.
India’s AIF ecosystem is deepening rapidly. Manager-led alternatives have expanded across Category I, II, and III, giving family offices greater choice, manager diversification, and fee-negotiation leverage. In practice, this allows families to allocate capital by sleeve, vintage, and strategy, while demanding institutional-grade reporting and transparency.
Alpha AMC’s Category I AIF (VentureX)
Alpha AMC’s Category I AIF, VentureX, offers a practical illustration of how a focused product fits into a family office framework. VentureX reported early commitments of approximately ₹250 crore at first close, signalling meaningful HNI and institutional interest. Ongoing manager updates indicate NAV appreciation and early realised uplifts from select SME listings and late pre-IPO investments. While these datapoints do not constitute a full track record, they represent the right kind of evidence family offices expect during early-stage diligence.
The rationale for selecting VentureX, or comparable Category I funds, is rooted in three factors.
● Strategy fit, as SMEs and early-stage enterprises offer structural growth optionality with multiple exit routes, including SME IPOs, strategic sales, and buyouts.
● Governance, with disciplined deployment and frequent investor reporting aligned to family office investment committees.
● Alignment, where staged capital, founder-friendly covenants, and exit discipline help reduce downside tail risk compared with informal angel investing.
Portfolio Construction, Governance, and Capital Discipline
In practice, family offices deploy AIFs within a deliberate portfolio architecture. Category II AIFs form the core, providing income visibility and mid-teens IRRs through buyouts and private credit. Category I AIFs sit as satellite allocations, absorbing higher volatility in exchange for asymmetric upside. A separate liquid sleeve is preserved for opportunistic co-investments and tactical public-market hedges. This structure balances cash-flow requirements, liquidity planning across generations, and long-term real returns.
Performance transparency and fees remain central to manager selection. Family offices are moving away from headline fee structures toward performance-aligned economics. This typically includes lower management fees, higher hurdle rates, and clearly defined carry waterfalls with clawback provisions.. Audited factsheets and reconciled NAVs allow families to verify performance rather than rely on narrative.
Succession and tax planning are quieter but powerful drivers of AIF adoption. Trustee-held AIF units simplify inter-generational transfers and create a cleaner audit trail than direct equity ownership. Certain equity-oriented AIFs may optimize long-term capital gains outcomes, subject to structure and holding periods, though families must still account for succession taxes, gifting rules, and domicile considerations. Here, legal and tax structuring matters as much as investment selection.
Due Diligence and Manager Selection Framework
When evaluating Category I managers, family offices apply a disciplined filter. SEBI registration and category verification are non-negotiable. Families assess minimum ticket sizes, lock-in terms, independent valuation policies, documented deal-approval processes, and diversified exit strategies that do not rely on a single liquidity event.
At the margin, negotiation discipline creates real value. Larger commitments often secure fee breaks and co-investment rights, while related-party transaction policies are reviewed closely. In this context, Alpha AMC’s public disclosures around VentureX serve as an initial reference point, though sophisticated investors will always require full audited documentation and standardised KPI reporting before committing capital .
Conclusion
For Indian family offices, AIFs are no longer about chasing higher returns. They are about building portfolios that can survive cycles, manage complexity, and last across generations. As alternatives take a larger share of family capital, the focus has shifted from individual deals to structure, governance, and manager discipline.
Category I AIFs now play a clear role in this setup. They offer exposure to SME and early-stage growth, but within a framework that brings reporting, oversight, and exit planning, something direct investing often lacks. Used as satellite allocations alongside more stable strategies, they allow families to pursue growth without losing control.
Funds like Alpha AMC’s VentureX show how this approach works in practice: focused mandates, defined processes, and transparency that aligns with how family offices think. In the end, AIFs are less about financial engineering and more about stewardship, i.e., helping families compound capital thoughtfully and pass it on intact.
