In a strategic effort to draw private investment into development initiatives, the Kerala  government has unveiled two Alternate Investment Funds (AIFs) designed to bolster  infrastructure and foster innovation within the state. This initiative is led by Kerala  Infrastructure Fund Management Ltd (KIFML), an asset management firm supported by  the state government alongside both public and private financial institutions. 

Fundraising Goals and Initial Capital 

KIFML aims to raise an initial ₹600 crore for the Kerala Infrastructure Fund and ₹250  crore for the Kerala Innovation Fund. These funds will attract capital from institutional  investors and non-resident Indians (NRIs). State government entities have already  pledged sponsorship investments, generating early momentum and instilling  confidence among potential investors. 

Key Focus Areas: Addressing Infrastructure Needs and Supporting  Startups 

The Kerala Infrastructure Fund will primarily channel investments into small and  medium-sized projects that tackle essential infrastructure gaps within the state. The  initial focus will be on healthcare-related initiatives, which are anticipated to be both socially beneficial and commercially viable. 

Conversely, the Kerala Innovation Fund is tailored to support startups across various  sectors. This fund is sector-agnostic and aims to back businesses that are building  scalable, innovative solutions with a strong operational footprint in Kerala.

Government and Institutional Involvement 

The Kerala Infrastructure Investment Fund Board (KIIFB) will sponsor the Infrastructure  Fund, contributing 30 percent of the total corpus as the government’s share. Similarly,  the government will also contribute 30 percent to the Innovation Fund through state linked institutions. The Kerala Financial Corporation (KFC) will provide 15 percent, while  both the Kerala State Industrial Development Corporation (KSIDC) and Kerala State  Financial Enterprises (KSFE) will each contribute 7.5 percent. 

Identified Projects and Investment Pipeline 

Ellangovan K, Managing Director of KIFML, has indicated that the fund manager has  already commenced capital raising while concurrently identifying suitable projects. To  date, 52 projects have been shortlisted—40 in the infrastructure sector and 12 in  innovation. 

KIFML is expected to announce its inaugural investment soon. Only companies based in  Kerala—those registered in the state or with significant operations and economic  activities in Kerala—will qualify for funding. 

Healthcare Leads Early Infrastructure Investments 

A significant portion of the projects selected under the Infrastructure Fund is focused  on the healthcare sector. These include companies involved in medical devices,  hospitals looking to expand, and the establishment of infertility clinics and dialysis  centres. Ellangovan highlighted that these investments will resemble Series B funding,  targeting firms with stable revenues, a solid user base, and a clear strategy for scaling  operations. 

Investment Size and Timeline 

The investment period for both funds will extend over three years. KIFML has the  approval to invest up to ₹125 crore in a single infrastructure project, with typical  investment sizes expected to range from ₹20 crore to ₹40 crore per project. For the  Innovation Fund, individual investments are likely to fall between ₹10 crore and ₹15  crore. 

Through these two AIFs, Kerala aspires to create a structured framework for private  equity involvement while accelerating sustainable infrastructure development and  fostering innovation-driven entrepreneurship throughout the state.