According to IVC: "The Indian auto ancillary sector has experienced rapid growth in the last decade, with the emergence of global auto majors. The auto ancillary sector is currently undergoing major structural changes. The strategic objective of IAF would be to identify and invest in opportunities arising out of the restructuring and consolidation of the sector".

The fund has been sponsored by Infrastructure Leasing and Financial Services (IL&FS) who have a strong presence in investment banking and advisory services. International Finance Corporation (Washington) and the German Investment and Development Company (DEG), will invest upto 15 per cent of the fund.

IFC (W) is a member of the World Bank Groupand is the largest multilateral source of equity and local funding for private sector projects in the developing countries. DEG is the private investment arm of the Government of Germany focussing on investments in commercially and technically sound projects in developing countries.

The IAF represents the second major initiative of IVC this year, after the closure of SARA Fund a general investment fund with the commitments of around Rs 1.5 billion.