Private Equity Opportunities Through Category II AIFs in India

India’s private markets have matured significantly over the last decade. As businesses scale faster, diversify capital sources, and delay public listings, Category II Alternative Investment Funds (AIFs) have emerged as a preferred route for investors seeking exposure to private equity, growth equity, secondaries, and thematic strategies.

Category II AIFs are regulated by SEBI and typically invest in unlisted equity, growth-stage companies, late-stage opportunities, pre-IPO situations, and structured private equity strategies. These funds do not employ leverage at the fund level and are designed for long-term capital appreciation through active ownership and disciplined exits.

This article outlines key Category II AIF private equity strategies currently available, based entirely on the official fund presentations shared.

Why Category II AIFs Are Central to Private Equity Investing

Category II AIFs form the backbone of India’s private equity ecosystem. These funds typically invest across:

• Growth equity and late-stage private companies
• Pre-IPO opportunities with defined exit visibility
• Secondaries transactions offering faster capital rotation
• Thematic strategies aligned with structural economic shifts

Unlike early-stage venture capital, these strategies often focus on businesses with established revenues, improving profitability, and clearer paths to exit, albeit with inherent illiquidity and risk.

India-Focused Early Growth Private Equity

ICICI Venture – IVen Amplifi Fund

The IVen Amplifi Fund is an India-focused early growth private equity strategy managed by ICICI Venture, one of the pioneers in India’s alternative assets space. ICICI Venture has been active since 1988 and has invested across private equity, growth equity, real estate, infrastructure, and special situations, with over USD 6.5 billion in AUM since inception and more than 610 investments .

The Amplifi strategy is positioned toward early growth-stage businesses, leveraging ICICI Venture’s access to proprietary deal flow, sector expertise, and institutional networks within the broader ICICI Group. The fund benefits from ICICI Venture’s experience in managing investments across multiple economic cycles, while maintaining a disciplined private equity approach.

Mid-Stage Private Equity with Growth-Risk Balance

Discovery Fund II – EAAA Alternatives

Discovery Fund II is a SEBI-registered Category II AIF focused on providing growth capital to mid-stage private companies . The fund targets businesses that have moved beyond early-stage risk but still offer meaningful growth potential before IPO or strategic exits.

EAAA Alternatives highlights that mid-stage private equity historically offers a balanced profile of growth and risk, positioned between venture capital and late-stage buyouts. The fund is backed by an institutional investment platform with:

• ~INR 63,000 crore of AUM
• A 70+ member investment team
• An independent risk management framework

Discovery Fund I, the predecessor strategy, reports a fund-level IRR of approximately 23% (post fees, pre-tax) and a TVPI of around 1.4x as of September 2025, based on valuations disclosed in the presentation . These figures are historical and do not indicate future performance.

Private Equity Through Secondaries

Neo Secondaries Fund

The Neo Secondaries Fund (NSF) offers a differentiated private equity secondaries strategy, focusing on acquiring existing stakes from private equity and venture capital investors seeking liquidity .

Secondaries investing differs from primary private equity in that it typically:

• Targets maturing companies with operating track records
• Offers shorter holding periods, typically 4–5 years
• Provides greater visibility on exits
• May allow entry at discounted valuations relative to primaries

The fund is managed by Neo Asset Management, which oversees ~INR 17,000 crore of AUM and serves over 1,500 family offices and HNIs. The presentation highlights structural advantages of secondaries such as earlier cash flows, clearer exit paths, and lower relative risk compared to early-stage investing, while still remaining within the private equity universe .

Growth-Stage Technology Exposure

Nippon India Digital Innovation Fund 2A

Nippon India Digital Innovation (NIDI) Fund 2A is a Category II AIF positioned as a “Multi-Manager Winners” fund investing in growth-stage technology start-ups .

The fund draws its deal universe from the portfolio of NIDI Fund I, a venture fund-of-funds backed by large Japanese institutional investors such as Nippon Life Insurance, Mizuho Bank, and the Development Bank of Japan. NIDI Fund I reported a gross IRR of 21% and gross TVPI of 1.42x (pre-fees) as of March 2024, based on disclosed data.

NIDI Fund 2A focuses on:

• Series B and C stage investments
• Selective primary and secondary opportunities
• Investments in winners emerging from top-tier VC funds

The strategy aims to reduce blind-pool risk by investing in companies that already have institutional validation and operating traction.

Late-Stage and Pre-IPO Private Equity

Axis New Opportunities AIF – Series II

Axis New Opportunities AIF – Series II is a Category II AIF focused on growth equity and late/pre-IPO investments . The fund seeks category leaders with strong strategic moats across sectors such as:

• Financial services
• Consumer and healthcare
• Manufacturing
• Technology and IT

The strategy benefits from the broader Axis ecosystem, including Axis Mutual Fund, Axis Bank, and Axis Capital, providing access to proprietary deal flow, research depth, and IPO execution experience. The fund maintains a compact portfolio of approximately 8–10 companies, with minority investments and a clear emphasis on capital return discipline.

Thematic Private Equity: Defence and Space

360 ONE Multi-Stage Defence and Space Fund

The 360 ONE Multi-Stage Defence and Space Fund is positioned as India’s first multi-stage private equity fund dedicated to defence and space technologies .

The fund adopts a multi-stage approach, investing across venture, growth, and late-stage/pre-IPO opportunities in companies with dual-use technologies. According to the presentation, the strategy aims to address a significant white space in private markets, as most defence-focused investments have historically been early-stage.

The fund benefits from:

• A thematic investment framework aligned with policy-driven growth
• Advisory board members with defence and space sector expertise
• A diversified portfolio construction targeting 18–22 investments

Pre-IPO Value Creation Strategy

Bharat Value Fund – Series IV

Bharat Value Fund (BVF) Series IV follows a pre-IPO private equity strategy, investing in IPO-ready businesses at valuation inflection points .

The fund emphasizes:

• Asset-backed, profitable businesses
• First institutional capital in select cases
• Active ownership, governance support, and IPO readiness

According to the deck, prior BVF series have focused on disciplined execution, regional-to-national growth stories, and structured exits through IPOs, secondary sales, or strategic transactions.

Growth and Late-Stage Private Equity

Value Quest Scale 2 Fund

ValueQuest offers private equity exposure through the ValueQuest S.C.A.L.E. Fund II, a SEBI-registered Category II AIF focused on growth-stage and late-stage growth investments . ValueQuest is an India-dedicated alternate investment firm with approximately USD 2.9 billion in assets under management, serving domestic corporates, family offices, UHNIs, and institutional investors across public and private market strategies.

The S.C.A.L.E. Fund II follows a sector-agnostic private equity approach, with investments spanning both the classic economy—including consumer, pharma and healthcare, specialty manufacturing, and BFSI—and the new economy, such as energy transition, climate-tech, and technology-driven businesses. The fund typically targets larger investment ticket sizes, generally in the range of ₹150 crore to ₹400 crore, and may offer co-investment opportunities for eligible investors alongside the main fund.

Building on the experience of ValueQuest’s earlier private equity fund, the strategy emphasizes investing in businesses with established revenues, scalable models, and identifiable liquidity pathways, including IPOs. Structured as a closed-ended Category II AIF with a long-term horizon, the S.C.A.L.E. Fund II aims to balance growth potential with visibility on exits, aligning with investors seeking mature private equity exposure within India’s evolving private markets.

How Investors Typically Use Category II Private Equity AIFs

Based on the strategies presented, Category II private equity AIFs are often used by investors to:

• Complement public equity exposure
• Access unlisted growth opportunities
• Participate in pre-IPO value creation
• Diversify across primary, secondary, and thematic strategies

These funds are generally suitable for HNIs, UHNIs, and family offices with long-term capital and an understanding of illiquidity and market risk.

Key Considerations Before Investing

While Category II AIFs offer attractive access to private markets, investors should carefully evaluate:

• Fund strategy and stage focus
• Manager track record and governance
• Exit visibility and holding periods
• Liquidity constraints and capital call structures

All investments involve risk, including the potential loss of capital, as clearly stated across the fund presentations.

Conclusion

India’s Category II AIF landscape offers a broad spectrum of private equity opportunities, ranging from early growth and mid-stage investing to secondaries, pre-IPO, and sector-specific themes such as defence and space. The funds discussed above illustrate how different strategies can address varying investor objectives, risk appetites, and time horizons.

For investors seeking structured exposure to India’s private markets, Category II AIFs remain a critical and evolving avenue—provided decisions are made with a clear understanding of strategy, risk, and long-term commitment.

👉 Contact Kalviro Ventures to learn more about private equity opportunities through Category II AIFs in India.