Private Equity Funds in India: What They Are and How to Invest

Private equity funds in India are, for most individual investors, SEBI-registered Category II alternative investment funds (AIFs) that buy stakes in unlisted companies. Each investor commits at least ₹1 crore. The fund draws that money in stages and pays it back as it sells or lists its companies, over terms of six to ten years in the funds on our list.

In the five funds compared below, the management fee runs up to about 2% a year, and the manager shares in profit only above a hurdle of 10% to 12.5%.

Fund terms below come from each manager’s disclosures, as our reviews summarised them between August and October 2026. Each fund’s private placement memorandum (PPM) governs its terms.

What is a private equity fund?

A private equity fund pools commitments from many investors and buys shares in companies that do not trade on a stock exchange. It runs for a fixed term. Category I and II AIFs run as close-ended funds with a minimum term of three years, so investors cannot redeem units on demand.

Types of private equity funds in India

• Growth funds buy minority stakes in companies that already earn revenue and are expanding.
• Venture funds back younger companies; many register as Category I venture capital funds, and some as Category II.
• Buyout funds buy control of a company.
• Pre-IPO and PIPE funds invest shortly before a listing, or in listed companies through private deals.
• Secondaries funds buy existing stakes from earlier investors, which can shorten the wait for exits.
• Funds of funds commit to several underlying private equity or venture funds.

Private equity funds in India on our list

All Category II AIFs, as listed in the private equity, venture capital and pre-IPO sections of our AIF page on 5 November 2026 (page updated 4 November 2026). We show no returns here; each review sets out the fund’s own disclosures.

Factsheets and presentations for each fund are on our AIF page after sign-in, and we can take you through any of them.

Fees and terms of five private equity funds in India

Each manager’s materials (August to October 2026), as our reviews summarise them. The PPM governs every term.

What a private equity fund costs on ₹1 crore

The fee base changes the bill as much as the rate. A fee charged on the full commitment from day one costs more than the same rate on money actually drawn.

Our illustration, not any manager’s terms. ₹1 crore commitment drawn 25% a year; fee before GST. With 18% GST the totals are ₹11.8 lakh and ₹8.26 lakh.

The manager’s share of profit, called carried interest or additional return, applies only above the hurdle. Whether the PPM has a catch-up clause decides how much of the profit just above the hurdle goes to the manager.

Our illustration, not any manager’s terms. ₹1 crore invested once and held six years; 12% hurdle compounding yearly (₹97.4 lakh); 20% carry; whole-fund waterfall. The table leaves out management fees, expenses and tax. A fund can also return less than the money invested.

How to read private equity returns

Private equity funds report three numbers. IRR is the yearly return from the timing and size of every cash flow, including the value still held. DPI divides the cash a fund has returned by the cash investors put in. TVPI adds the remaining value to DPI.

Only DPI counts cash already received. A young fund can show a high IRR that rests almost entirely on valuations. Our note on DPI, TVPI and IRR works through each, and our Category II AIF guide sets out the benchmark data by vintage year.

Who can invest in private equity funds in India

• Resident investors: ₹1 crore per scheme, or more where the fund sets a higher minimum.
• Accredited investors: lower amounts where the scheme allows; ask us. Our accredited investor guide sets out the tests.
• NRIs: where the PPM accepts them, through NRE or FCNR money on a repatriable basis, or on a non-repatriable basis.
• GIFT City: private equity schemes there are usually in US dollars, with a minimum of USD 150,000 for a restricted scheme (accredited investors from USD 50,000) and USD 250,000 for a venture capital scheme. A GIFT City fund that invests in India is open to NRIs, not to resident Indians. Our GIFT City page lists the funds.

How private equity funds in India are taxed

Category II AIFs are pass-through for tax. The investor pays tax on the fund’s gains, interest and dividends as if holding the investments directly, and the fund deducts tax at source when it distributes. The rate depends on the type of income and how long the fund held the asset, under current rules for FY 2026-27. Our note on Category II AIF tax covers the detail; confirm your own position with a tax professional.

Risks the fund documents name

• Illiquidity: investors cannot redeem units before the term ends, and the manager can extend the term within the PPM’s limits.
• Concentration: 360 ONE’s materials describe 6 to 8 core positions, and Nippon’s 8 to 12 companies, so each holding carries a large share of the outcome.
• Valuation: an independent valuer values the unlisted holdings, so the NAV stays an estimate until the fund sells each company.
• The J-curve: fees and drawdowns run ahead of exits, so returns often look negative in the early years.
• Missed drawdowns: the PPM sets penalties, and under SEBI’s December 2024 circular an investor who misses a call loses the pro-rata share in that investment.

How to invest in private equity funds in India

1. Read the fund’s PPM and our review: the fee base, hurdle, catch-up, term, extensions and drawdown pace.
2. Complete KYC with the fund and sign the contribution agreement for your commitment.
3. Pay the first drawdown, then each later call by the deadline in the notice. Our guide to AIF capital calls explains notice periods.
4. Receive statements and valuations, and distributions as the fund exits companies.

Questions investors ask about private equity funds

What is the minimum for private equity funds in India?

₹1 crore for a Category II AIF, unless the fund sets more; Value Quest S.C.A.L.E. Fund II, for example, asks for ₹2 crore. Accredited investors can invest lower amounts where the scheme allows.

Can I exit a private equity fund early?

Not in the usual course. A Category II AIF runs for a fixed term, and money comes back as the fund exits its companies. The PPM sets whether, and how, an investor can transfer units.

How much do I pay on day one?

Only the first drawdown. In the five funds above it ranges from 10% to 40% of the commitment; the fund calls the rest over the investment period.

How do I check that a fund is registered with SEBI?

Every AIF has a SEBI registration number starting IN/AIF1, IN/AIF2 or IN/AIF3, for Category I, II or III. SEBI publishes the list of registered AIFs, where the number can be looked up.

What is the 2 and 20 fee structure?

“2 and 20” is shorthand for a 2% yearly management fee and a 20% share of profits for the manager. The five funds compared above all set a hurdle the fund must clear before the manager shares in profit; the fee table shows each fund’s terms.

What are some private equity funds in India?

The table above lists Category II private equity, venture capital and pre-IPO funds from our AIF page, each linked to our review where we have one.

Is a private equity fund the same as a PMS?

No. A PMS holds listed shares in your own account, and you can exit it at any time. A private equity fund pools money into mostly unlisted companies for several years. Our glossary of investing terms defines the terms used in both.

A private equity fund gives an investor a share of unlisted Indian companies for a ₹1 crore commitment, in exchange for money tied up for six to ten years, fees of up to about 2% a year and a share of profit above the hurdle for the manager. The private equity funds we distribute are on our AIF page.