From Gifty City to Private Credit: Why are they on the investment radar of HNIs and ultra-rich?

Where do rich invest

Picture this: India’s richest are no longer satisfied with just buying swanky penthouses in Mumbai or rare vintage wines in Paris. They are looking for the next big play: investments that are not just about keeping money safe but about multiplying them fast, smart, and globally.

The ultra-wealthy are no longer dabbling, they are strategising like institutional investors, but with more risk appetite and sharper tools. And three hot terms keep coming up in their conversations: GIFT City,  Private Credit and AIFs (Alternative Investment Funds).

Let’s decode what that means for the next-gen billionaires in the making and for anyone who dreams of playing in the same sandbox.

GIFT City: The modern gateway to global wealth

If the last decade was about investing abroad through complex offshore structures, the next one is about doing it through GIFT City (Gujarat International Finance Tec-City), India’s International Financial Services Centre in Gujarat.

"Although GIFT City is still at an early stage, the interest is substantial. It can provide convenient access to international equities, bonds, and alternative investments in a regulated, less cumbersome environment. Over time, it is expected to grow due to this ease and tax benefits, helping investors keep part of their portfolios globally diversified while continuing to support their India allocations. It is particularly useful for HNIs (high net-worth individuals) and ultra-HNIs who want to diversify and maintain exposure to global markets," said Vikas Satija, MD & CEO of Shriram Wealth.

In GIFT City, the Accredited Investor (AI) framework has been a game changer for wealthy individuals looking to access global markets.

Accredited investors are those who meet certain income or net-worth thresholds and are therefore deemed financially savvy enough to handle complex, higher-risk products. What makes GIFT City stand out is the dramatic lowering of entry barriers. While the standard minimum ticket size for international funds is $150,000, accredited investors can now get in with as little as $10,000. This opens the door for a much wider set of HNIs and family offices to diversify into offshore equities, bonds, private equity, and alternative funds through a tax-efficient, Sebi (Securties and Exchange Board of India)-regulated gateway without having to set up elaborate structures abroad.

"This flexibility makes global offshore investing far more accessible. These structures enable exposure to global equities, bonds, real estate, and private equity funds, often denominated in USD, thereby diversifying portfolios and reducing currency concentration risk," said Srikanth Subramanian, CEO and Co-founder, Ionic Wealth.

For India’s wealthy millennials and GenZ inheritors, this democratisation is huge as it means global portfolios without entry barriers.

Satija adds another angle: “Indian HNIs are leveraging GIFT City to access global equities, private credit, hedge funds, and structured products in a tax-efficient environment. It offers zero capital gains tax on fund-of-fund structures, full currency convertibility, and simplified compliance.”

Source: Ionic Wealth

Private credit:  Flexible capital, superior yield

Private credit is having its big moment, and not just because traditional debt instruments like fixed deposits (FDs) or debt mutual funds are no longer sexy. What’s really pulling the wealthy towards this asset class is high returns.

“Private credit is being driven by multiple factors, like the government of India's push for increased infrastructure spends and rise of new-age businesses,” explains Satija. “Banks, at times, are unable to fulfil certain end-use cases of small and mid-sized corporates, such as acquisitions or working capital correction. This gap is being filled by NBFCs and credit AIFs which provide flexible and favourable financing solutions.”

Shriram Wealth projects 12–18 percent annualised yields on private credit over the next five years. Compare that to FDs of 6–7 percent and you see why this space is booming.

Traditional banks are like cautious parents. They will only give you money if you fit their template. Private credit players are the cool elder cousins who are willing to fund your expansion, your pivot, or even your bold acquisition, in return for juicier returns.

“Interest of Ultra HNIs is surging across diverse investment segments with heightened sophistication. Investors are increasingly gravitating towards private credit, 'special situations' and real estate funds, recognising them as effective diversifiers amid the prevailing volatility in equity markets," said Subramanian.

Special situations refer to unique, often temporary scenarios that promises opportunities for potentially high returns beyond regular market investing. Investing in companies involved in M&A activties is one example.

Over time, the high-yield credit segment has been largely overlooked by mutual funds and non-banking finance companies (NBFCs), creating a significant opportunity for these funds to capitalise on this underserved market, said Subramanian.

For ultra-wealthy families, private credit has become more than just an asset. It’s a play for influence. They are funding the kind of businesses that banks hesitate on, and in doing so, they are shaping India’s growth story while pocketing double-digit returns.

AIFs: The playground for the bold

AIFs are funds established or incorporated in India and registered with Sebi under Alternative Investment Funds Regulations, 2012. It is a privately pooled investment vehicle which collects funds from investors, whether Indian or foreign, for investing  in accordance with a defined investment policy. Basically, AIFs are not your vanilla mutual funds. They deal in venture capital, private equity, hedge funds, and long-short strategies. The minumm size of investment in an AIF is Rs 1 crore.

In India, AIFs are regulated by Sebi and come in three categories. Category I includes funds that invest in socially or economically beneficial areas like startups, infrastructure, and small and medium enterprises (SMEs). Category II covers private equity, real estate, and debt funds that don’t get special incentives but also aren’t restricted in how they invest.  This is where most HNIs flock, chasing high returns and diversification.

Category III funds are the tactical ones, playing with long-only or long-short strategies and complex trading setups aimed at delivering aggressive, market-linked gains. Together, they offer India’s wealthy a menu that ranges from backing unicorns to making contrarian stock bets, all with higher risk, higher reward dynamics.

“HNIs often prefer Category II AIFs for their potential high returns and diversification benefits,” notes Satija.

Srikanth Subramanian echoes the sentiment: “Category II and Category III AIFs command strong preference due to their capacity to deliver diversified exposure and superior risk-adjusted returns.”

But here’s the catch: AIFs are not for the faint-hearted. They’re illiquid, often locking your money in for years. They require due diligence, clarity on exits, and a stomach for volatility. Or, as Satija warns, “Do not treat AIFs as liquid or short-term instruments. They are ideal for seasoned HNIs seeking portfolio enhancement beyond traditional assets.”

The reward? Unlisted equity, including private equity and venture capital, is projected to deliver 18–25 percent internal rate of return (IRR) over the next 5–7 years. That’s the kind of growth that turns millionaires into billionaires, said Satija.

And as he puts it: “AIFs can offer superior returns, but they require informed, long-term commitment. They are ideal for seasoned HNIs seeking portfolio enhancement beyond traditional assets.”

Taxability of AIF? Category I and II AIFs enjoy a “pass-through” status under Section 115UB of the Income-Tax Act. This means that income (except business income) is taxed directly in the hands of investors, according to their applicable tax slab, while the fund itself is not liable to pay tax on such income. Category III AIFs do not enjoy pass-through status. All income earned by these funds is taxed at the fund level itself

The ultra-wealthy are rewriting the rules of investing in India. They’re moving away from plain-vanilla equities and FDs, embracing high-yield plays like private credit, AIFs for bold bets, and using GIFT City as a launchpad to the world.

In the words of Ionic Wealth’s Subramanian, it’s about “differentiated strategies focusing on AI, space tech, and climate tech, alongside private credit and offshore funds.”