Alternative Investment Funds - India
Why invest in AIFs
Alternative Investment Funds (AIFs)
An Alternative Investment Fund (AIF) is a privately pooled investment vehicle established or incorporated in India. These funds collect money from sophisticated investors, both Indian and foreign, to invest according to a defined investment policy for the benefit of these investors. AIFs are distinct from conventional investment instruments and are regulated by the SEBI (Alternative Investment Funds) Regulations, 2012. (SEBI = Securities and Exchange Board of India) They cannot make invitations to the public to subscribe to their units and raise funds through private placement.
AIFs can be formed as a trust, a company, a Limited Liability Partnership (LLP), or a body corporate, with most registered AIFs currently in trust form. The "corpus" of an AIF refers to the total funds committed by investors through a written contract.
Who Can Invest in AIFs? AIFs typically require substantial investments, generally attracting institutions and High Net-worth Individuals (HNIs). Resident Indians, NRIs, and foreign nationals are eligible to invest. The minimum investment limit for most investors is Rs. 1 crore, while directors, employees, and fund managers can invest a minimum of Rs. 25 lakh. Angel funds, however, have a minimum investment of Rs. 25 lakh per angel investor. AIFs usually come with a lock-in period.
Types of AIFs in India SEBI categorises Alternative Investment Funds into three main categories:
• Category I AIFs
• Category II AIFs
• Category III AIFs
Category I Alternative Investment Funds
Tenure: Category I AIFs are required to be close-ended and have a minimum tenure of three years. The tenure is calculated from the date on which the scheme announces its final closing.
Disclaimer
“I am the Co Founder and Fund Manager for ABHI Incubation Fund an Asset Management Company currently managing ABHI Incubation Angel Fund (SEBI registration IN/AIF/24-25/1514). I am "NISM - Series -XIX-D: Category I and II Alternative Investment Fund Manager" Certified.
This content is for informational purposes only. It does not and should not be considered professional advice. Please consult with a qualified expert before acting on any information shared here."