Returns speak a lot for Gaja Alternative Asset Management as funding stays a risky bet

ET Intelligence Group: Gaja Alternative Asset Management, which manages and advises India-focused investment funds, plans to raise ₹450 crore through a fresh issue to fund its investments in existing and new funds and repay loan. Additionally, it will raise ₹100 crore through an offer for sale. The promoter stake will fall to 54% after the IPO, from 71% currently. The company has generated an average multiple on invested capital (MOIC) of 3.3 times across prior investments and funds, implying strong investment returns. However, its earnings are dependent on fund performance and its business is exposed to regulatory changes. Given these factors, the issue appears to be suitable for long-term investors with a higher risk tolerance.BusinessIncorporated in 1999, the company invests in sectors including education, energy and environment, financial services, consumer and digital technology. Its investment approach is focused on the mid-market segment, comprising deal size of ₹50-250 crore. The Limited Partners (or investors) of Gaja Capital funds are spread across 20 countries including India, the US, Europe and the Middle East. It derives income from management fee, carried interest, which refers to share of profits from successful investments, and income from sponsor commitment. Income from sponsor commitments represents gains on the company's own capital invested in the funds. As of March 31, 2026, it has committed about ₹274 crore, or 6.4% of the total size of the Gaja Capital Funds. The carried interest accounted for nearly 48% of total income in FY26. Any weak investment performance will affect the carried interest and sponsor related income. According to Crisil, the assets under management for alternative investments in India are expected to grow at 25-27% to reach ₹41 lakh crore-44 lakh crore by March 2030.133334880FinancialsRevenue increased to ₹158 crore in FY26 from ₹104 crore in FY24. Net profit grew to ₹82 crore in FY26 from ₹45 crore in FY24. Net margin rose to 52% from 43% during the period, reflecting operating leverage as cost-to-income ratio fell to 44.6% in FY26 from 52.3% in FY25. Across its three funds, MOIC has ranged from 1.7 times to 3.8 times. MOIC shows how much an investment has grown compared with the amount originally invested. The return on equity increased to 16.5% in FY26 from 14.5% in FY24.Read more: Anthropic pre-IPO credit facility set to climb past $10 billionValuationAs the first standalone private equity firm to list on the exchanges, Gaja Alternative Asset Management has no direct listed peers. The IPO is priced at a P/E multiple of 27.5 times, compared with P/E multiples of around 25-40 times for listed asset management companies (AMCs).