Insurers, pension capital are key to private credit’s next phase: Nippon Alts’ new CEO Aashwin Duggal

Greater participation from these institutions, he said, could deepen India's domestic capital base and provide long-term funding for private credit, private equity and other Category II strategies. Duggal has over 27 years of experience across asset management, banking and financial services. He was earlier Deputy Head–Alternatives at Nippon India and Co-Chief Business Officer. The business was previously led by Ashish Chhugani as Head of Alternative Investments.

Duggal joined Nippon in 2007 and has also worked at Tata Asset Management, Kotak Mahindra Bank and ING Investment Management. India's alternatives industry, particularly the AIF segment, has expanded rapidly in recent years, led by Category I and Category II funds. However, it continues to remain heavily dependent on wealthy individuals and family offices. SEBI data show that total AIF commitments rose to Rs 17.53 lakh crore as of June 2026, up nearly 24% year-on-year, while cumulative investments crossed Rs 7 lakh crore for the first time.

Category II funds, which include private equity, private debt, real estate and related strategies, accounted for Rs 13.03 lakh crore in commitments as of June 2026. Duggal said regulators should consider raising the investment limits available to life and general insurers, which he said currently stand at 3% and 5%, respectively. “One of the asks would be to consider increasing the regulatory investment limits for both life and general insurance companies, which are currently at 3 percent and 5 percent, respectively.

Greater headroom could encourage larger domestic allocations over time. Globally, insurance companies are allocating a much higher proportion of their AUM to alternatives, with allocations of around 20 percent seen in some markets,” he said. Insurers have already begun increasing their exposure to private credit. Industry reports indicate that insurance companies have nearly doubled their commitments to private credit funds over the past two years, with some using AIFs to diversify their portfolios and improve returns for policyholders.

The regulatory framework is also evolving. Earlier in 2026, the Insurance Regulatory and Development Authority of India widened insurers' investment options, including by permitting investments in equity and debt instruments of private limited companies and easing norms for infrastructure financing through special purpose vehicles. Under the revised framework, life insurers can invest up to 3% of life or segregated funds, while general insurers can invest up to 5% of their investment assets, in private limited companies, AIFs and venture funds combined.

Duggal's argument is that additional headroom could allow insurers to build larger, more diversified allocations over time, particularly in private credit, where longer-duration assets may match insurers' liability profiles. EPFO's potential entry Duggal also backed a gradual, safeguards-led pathway for pension funds to access Category II AIFs. “There is a case for evaluating a calibrated framework for pension funds such as EPFO to participate in Category II AIFs.

Even a small initial allocation could help build familiarity with the asset class and create a pathway for long-term capital over time,” he said. The EPFO is already considering allocating up to 3% of fresh annual accretions to Category I and Category II AIFs, with the proposal expected to be placed before its Central Board of Trustees in November. EPFO has not yet invested in SEBI-regulated Category I or Category II AIFs, and any move would require final trustee approval and detailed investment guidelines.

Initial investments may be routed through institutional platforms such as the National Investment and Infrastructure Fund and SIDBI's Startup India Fund of Funds 2.0. Proposed safeguards reportedly include a minimum AIF corpus of Rs 100 crore, caps on exposure to individual funds, restrictions on overseas-incorporated entities and requirements relating to fund-manager independence. For Category II fund managers, even a small allocation from EPFO could be significant, given that the retirement body manages roughly Rs 30 lakh crore in savings for nearly 30 crore members.

Private credit demand Duggal said private credit is emerging as one of the more active areas of institutional interest, particularly among insurers and family offices. “Private credit is seeing increasing interest from domestic institutional investors, including insurers and family offices, particularly across performing credit and high-yield credit strategies,” he said. The growing appetite reflects a search for yield and diversification beyond listed equities and traditional debt.

It also aligns with the broader expansion of India's AIF industry. SEBI's annual report recorded 1,829 registered AIFs as of March 2026, of which 1,019 were Category II funds. Despite the growing interest, Duggal cautioned that Category II strategies are not suited to short-term capital. “Category II investments are inherently illiquid and often have multi-year horizons. That is why they require long-term, patient capital,” he said.

That is central to the case for insurers and pension funds. Unlike retail investors, these institutions can, in principle, hold assets through market cycles, making them potential sources of capital for private equity, private debt and real assets, provided governance, valuation, liquidity and concentration risks are carefully managed. “The broader objective is to deepen India's domestic capital base and give long-term institutions a more diversified set of investment opportunities,” Duggal said.