Indian endowment fund closes in on investment advisor

The IIT-Delhi Endowment fund has ambitions to become a $1 billion fund over the next decade and hopes to adopt some of the best practices from the world's top university endowment models.
Indian endowment fund closes in on investment advisor

India’s first endowment fund by a government-owned premier technology institute is close to picking an investment advisor to help with short- and long-term investments.

“We have a tender to help us identify an investment advisory. We are going through the process to identify the firm,” Anurag Rastogi, CEO of Indian Institute of Technology – Delhi (IIT Delhi), told AsianInvestor.

“We have identified the advisory firm but are in the process of finalising the agreement and other processes. The [endowment] board will work closely with the firm,” he said.

Anurag Rastogi

IIT Delhi is the first endowment fund among 23 IITs in India.

IITs were created by the government as centres of excellence for training and research and development in science, engineering and technology.

The fund -- established on October 31 2019 -- has its own board of directors comprising high-profile alumni and operates through an endowment management foundation.

“18 founders (all alumni) put in seed capital for the endowment fund,” said Rastogi. “All of them are scattered around the globe and doing very well for themselves. They were all familiar with the concept of an endowment fund.”

The foundation’s activities, including investment, are overseen by Rastogi, who reports to the board of directors.

While financially only three years old, it has high ambitions of becoming a $1 billion fund over the next decade.


While the IITs are government funded, there is growing awareness that government funding alone will not be able support the costs of these technology institutes, especially as the institutes have grown strongly over the past few decades.  

IIT Delhi ranked third among IITs in India in 2022 according to the Ministry of Education’s National Institutional Ranking Framework. 

“We cannot depend on the government to meet all of the institute’s funding needs,” said Rastogi.

“The core concept of the endowment is to build for the future. We would like it to partially support IIT Delhi’s operational costs. In the US for instance, statistics show that about 30% of operating costs of some US universities can be met through income generated through an endowment fund.”

While endowment funds are a fairly new concept for India and other emerging markets in Asia, they are an established phenomenon in the US and Europe. Among the biggest endowments in the world are Harvard University’s $51 billion endowment fund, Stanford University’s $40 billion endowment and Yale University’s $42 billion fund.

Endowment funds are long-term investors and aim to support a university’s annual spending without exceeding risk tolerance levels.


PVM Rao, a professor at IIT Delhi and director of the endowment management board, says there are important lessons to learn from the best endowment funds in the world. “We want to apply the best practices from various endowment funds. Some of the programs we run for alumni are borrowed from Stanford, Harvard and other institutions.”

“We are still in the inception years, so we can be flexible and experiment with what works and what doesn’t.”

Endowment models are quite established in the US, but fairly new in India.
Image credit: Shutterstock


For now, like public sector pension funds, endowment funds can invest primarily in local government securities and highly-rated corporate bonds. Up to 15% of investments can be invested in riskier assets such as equities. “Our regulations are similar to what provident funds can do and we are allowed to invest the same way,” said Rastogi.

IIT Delhi has an investment advisory board, with alumni who are strong in finance and hold top-level positions in the financial industry.

The government has been very receptive to the needs of endowment funds, he added. “We hope in future, regulations will ease further, and endowments will be allowed to invest even more in equities or riskier assets to generate higher returns,” said Rastogi.

Rastogi is quite optimistic about reaching the $1 billion mark. “We have not even tapped 1% of our alumni base, so it’s very much greenfield for us. Our alumni are spread across the globe, with 15-20% in the US, while another significant chunk is in India,” he said.

Some examples of famous IIT alumni include Google CEO Sundar Pichai; NR Narayanamurthy, the founder of Infosys; former RBI governor and IMF chief economist Raghuram Rajan and Vinod Khosla, founder of Silicon Valley venture capital firm Khosla Ventures.

“It takes about 40 to 50 years for an educational institute to have an alumni that is well-settled in life and stable in general. At least five of the IITs have now completed 50 years," added Rao.

"A couple have completed 60 years. So now is the time for the institute to consider an endowment as there is also more willingness on the part of the alumni to fund as well."

He noted that now, however, many people are getting rich much earlier, given the active start-up scene in India.

“Look at the number of unicorns (startups valued at over $1 billion) in India. Many of them are founded by IIT-ians. And they are already giving back by being large donors."



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