SEBI Registered Portfolio management service Alchemy Capital is set to launch its first domestic long-short Alternative Investment Fund (AIF) of Category III in the March quarter of this fiscal, with plans to roll-out a GIFT City version in 2026, Director Chief Investment Officer Hiren Ved has told Moneycontrol.
“The idea is straightforward. As the investor base matures, there’s demand for differentiated risk-reward profiles, absolute return strategies that can complement long-only allocations,” Hiren Ved said. “If the domestic product stabilises well, we’ll evaluate a GIFT variant next year,” he added.
The proposed fund, structured under Category III, will cater to domestic investors and NRIs initially, said Ved, adding that the aim is to balance directional equity exposure with hedging mechanisms to generate steadier returns across cycles. This AIF will be part of Alchemy’s effort to broaden its product suite beyond traditional long-only portfolios.
The proposed launch also coincides with a wave of long-short funds emerging from GIFT City, where managers are leveraging tax exemptions on derivative income until March 2030 and unlimited leverage flexibility relative to onshore vehicles. More than 20 long-short AIFs have registered at the IFSC since 2022, driving Category III commitments to $10.15 billion as of mid-2025, according to industry data.
GIFT City’s registration cycle has grown shorter over time, although a ‘single-window’ clearance is yet to be observed in reality. The presence of several dollar-denominated funds make GIFT City a preferred offshore gateway for NRIs/global investors seeking India exposure.
Overall AUM in GIFT City has reached $23.5 billion across 270 funds as of June 2025 data, with long-short vehicles comprising a growing share of that pool. Banking assets have surged past $100 billion as of November 2025, positioning GIFT City as a prime channel for global capital into Indian opportunities, including AIFs that leverage tax-neutral structures for hedging.
On the regulatory front, IFSCA's October 2025 proposals are in focus, as the deadline for public feedback approaches. A consultation paper on blended finance frameworks for Restricted and Venture Capital Schemes - allowing differential distribution to broaden participation and align with global standards – has sought comments until November 11, aiming to boost sustainable development and impact investing in GIFT.
Another proposal is seeking to make dematerialization of securities issued by IFSC entities mandatory. These securities would need ISINs from local depositories such as India International Depository IFSC, while allowing listings through global depositories (ICSDs). Public feedback is open until November 16, with an aim to simplify infrastructure and reduce settlement risks.
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