Market Trends of India Asset Management Industry
This section covers the major market trends shaping the India Asset Management Market according to our research experts:
Increase in Private Equity/Venture Capital Investment Activities is Driving the Market
Total PE/VC investment activity in 2021 was at USD 77.1 billion, a 62% increase over 2020. The PE asset class (excluding infrastructure and real estate) demonstrated a growth of 79%. Although three sectors - technology USD 16.3 billion, e-commerce USD 15.9 billion, and financial services USD 11.7 billion accounted for 57% of the total PE/VC investments by value, many sectors, such as media and entertainment, education, pharmaceuticals, and healthcare, showed significant growth. For the first time, 14 sectors notched up PE/VC investments exceeding USD 1 billion.
The number of active PE funds continued to grow in 2020, with global and domestic general partners (GPs) making up the bulk at 60%, followed by limited partners (LPs) (i.e., institutional investors and government affiliates) and corporates. As more funds increase focus on India, over 70% of investors concur that global PE firms and LPs/sovereign wealth funds investing directly are the biggest competitive threat. Growing investor confidence in the Indian market is visible because of the increasing penetration of major GPs and LPs into India's deal value.
High Growth Potential for Mutual Fund Industry in India is Driving the Market
In 2022, it was estimated that there would be around 1.88 crore (18.8 million) registered mutual fund investors in India as against 1.86 crore (18.6 million) households with an annual income of more than INR 10 lakh (USD 12,089) per annum. The number of mutual funds being offered, compared to previous years, has also increased exponentially.
Despite the competition among mutual funds, which has increased manifold over the years, their performance has been consistently good, and investors have benefitted immensely. The industry has grown rapidly over the last few years, with a growth rate of almost 40% per year. The main reason for this growth is investors' increased demand for financial products. This has led to an increase in the number of people investing their money in mutual funds, which have been able to meet this demand.
