Aditya Birla Sun Life Rolls Out ₹2,000 Crore Alternative Investment Fund Focused on Smallcap and Midcap Companies

Aditya Birla Sun Life Asset Management Co. has launched a Category III Alternative Investment Fund (AIF) with a target size of ₹2,000 crore as asset managers continue to expand offerings aimed at wealthy investors seeking listed equity exposure through private market structures, as per The Mint report. 

The ABSL Select Sector Fund includes a base corpus of ₹1,500 crore and a greenshoe option of ₹500 crore. The minimum investment amount has been set at ₹1 crore. 

Focus on Mid- and Small-Cap Companies 

According to investor documents reviewed by Mint, the fund will invest in mid- and small-cap companies across sectors such as capital goods, technology and new-age businesses. The strategy is based on the company’s existing portfolio management services (PMS) model. 

The fund will have a tenure of 7 years, with an option to extend it by another 2 years. Aditya Birla Sun Life AMC said the strategy would focus on companies with earnings visibility while maintaining portfolio liquidity. 

The company said nearly 90% of the proposed portfolio could be liquidated within a single trading day. 

Fees and Investment Structure 

The fund carries a 12% annual hurdle rate. Performance-linked fees may apply only if returns exceed that level. Annual management charges range between 1% and 2.5%, while some investor categories may also pay a 20% performance fee on gains above the hurdle rate. 

The first close of the fund is expected within 12 months, in line with Securities and Exchange Board of India (SEBI) regulations. The final close may take place over the following 12-24 months. 

Category III AIF Segment Sees Higher Inflows 

Category III AIFs have seen rising allocations from high-net-worth individuals (HNIs), ultra-HNIs and family offices over the past few years.  

These funds are increasingly being used by asset managers and wealth firms to offer hedge fund-style listed equity products. 

Higher Flows into Alternative Funds 

SEBI data showed Category III AIFs had raised commitments worth ₹3.11 trillion as of December 2025, accounting for nearly one-third of total commitments across the AIF industry. Inflows into the category rose 66% year-on-year during the April-June quarter last year. 

Unlike Category I and II AIFs, which largely invest in unlisted companies, Category III funds mainly invest in listed equities and can also allocate limited capital to pre-IPO opportunities. 

Read More: Invesco Mutual Fund Resumes Subscriptions in Overseas Fund of Fund Schemes! 

Conclusion 

The new fund comes amid rising participation in Category III AIFs, particularly among wealthy investors looking at concentrated exposure to listed mid- and small-cap companies. 

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