An Alternative Investment Fund (AIF) is a privately pooled investment vehicle registered with SEBI under the SEBI (Alternative Investment Funds) Regulations, 2012. Funds register as Category I, II or III, usually as a trust, with a sponsor and investment manager. Schemes need a minimum corpus of Rs 20 crore, and investors generally commit at least Rs 1 crore.
AIF categories
| Category | Typical strategy |
|---|---|
| I | Venture capital, SME, social impact, infrastructure |
| II | Private equity and debt funds without leverage |
| III | Hedge funds and complex trading strategies with leverage |
Structure
- Fund vehicle: commonly a trust, or company or LLP
- Sponsor with continuing interest in the fund
- Investment manager with qualified key personnel
- Trustee for trust structures
Registration process
- Set up the fund vehicle and appoint manager and trustee.
- Prepare the private placement memorandum.
- Apply to SEBI online with documents and fees.
- Respond to SEBI queries.
- Obtain registration and launch schemes.
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- Periodic reporting to SEBI
- Valuation and performance benchmarking norms
- Custodian appointment where required
- Tax filings and investor reporting
Frequently asked questions
Can an AIF raise money from the public?
No. AIFs raise funds only through private placement to eligible investors, not public offers.
Who can invest in an AIF?
Resident, non-resident and foreign investors can invest, subject to the minimum investment and applicable regulations. Accredited investors may have relaxations.
How long does SEBI AIF registration take?
It commonly takes a few months depending on the completeness of the application and SEBI's queries.
What is sponsor commitment?
The sponsor or manager must keep a continuing interest in the fund, a percentage of the corpus or a fixed amount, whichever is lower, as prescribed for each category.
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