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Introduction to Alternative Investment Funds

AIF is any privately pooled investment fund, (whether from Indian or foreign sources), in the form of a trust or a company or a body corporate or a Limited Liability Partnership (LLP) which are not presently covered by any Regulation of SEBI governing fund management (like, Regulations governing Mutual Fund or Collective Investment Scheme) nor coming under the direct regulation of any other sectoral regulators in India-IRDA, PFRDA, RBI<br><br>Hence, in a nutshell, AIFs are private funds, which are otherwise not coming under the jurisdiction of any regulatory agency in India<br>

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Introduction to Alternative Investment Funds

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  1. ALTSMART Introduction to Alternative Investment Funds

  2. What is Alternative Investment Fund (AIF)? • AIF is any privately pooled investment fund, (whether from Indian or foreign sources), in the form of a trust or a company or a body corporate or a Limited Liability Partnership (LLP) which are not presently covered by any Regulation of SEBI governing fund management (like, Regulations governing Mutual Fund or Collective Investment Scheme) nor coming under the direct regulation of any other sectoral regulators in India-IRDA, PFRDA, RBI • Hence, in a nutshell, AIFs are private funds, which are otherwise not coming under the jurisdiction of any regulatory agency in India

  3. On a day-to-day basis, which funds are covered under the AIF regulations? The definition of AIFs includes venture Capital Fund, hedge funds, private equity funds, commodity funds, Debt Funds, infrastructure funds, which are registered with SEBI under the Securities and Exchange Board of India (Alternative Investment Funds) Regulations, 2012 and the rules made therein

  4. What is the purpose of these regulations? The purpose of AIF Regulations is to extend the perimeter of regulation to hitherto unregulated funds, so as to ensure systemic stability, increase market efficiency, encourage formation of new capital and provide investor protection

  5. When did AIF guidelines come into effect? In 2012, SEBI merged regulations governing venture capital and private equity (formed in 1996) into an omnibus regulation under AIF

  6. What are various types of AIF Schemes available? AIFs are categorized into the following three categories, based on their impact on the economy and the regulatory regime intended for them:

  7. What is the minimum investment amount required & duration of the scheme? • Rs 10 million per investor and duration of scheme varies from 1 year to 10 years • It has been observed that there are certain Category -3 (hedge/capital market funds) which offer an anytime withdrawal facility

  8. Can an Investor buy and sell units everyday? • No, as units are not listed on any exchange and the fund schemes are of pre-specified duration. • AIF is a long-term investment product and is not meant for trading on a daily basis.

  9. What is the global market of AIFs? Global market for alternative investments has grown from USD 2.9 trillion in 2005 to 6.5 trillion in 2011 and is currently estimated to be worth more than 8 trillion

  10. What is the growth potential for the Indian AIF industry? • Globally, AIF occupy about 10% of individual investors' assets. By that metric, there is very high growth opportunity in near future • In about 5 years time (by year 2020) AIF assets from individuals / family offices alone can cross USD 5 billion (Rs 325000 million) 

  11. Thank You

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