q What is an Alternate Investment Fund (“AIF”)?
Alternative Investment Fund or AIF means any fund established or incorporated in India which is a privately pooled investment vehicle which collects funds from sophisticated investors, whether Indian or foreign, for investing it in accordance with a defined investment policy for the benefit of its investors. AIF does not include funds covered under the SEBI (Mutual Funds) Regulations, 1996, SEBI (Collective Investment Schemes) Regulations, 1999 or any other regulations of the Board to regulate fund management activities. Further, certain exemptions from registration are provided under the AIF Regulations to family trusts set up for the benefit of ‘relatives‘ as defined under Companies Act, 1956, employee welfare trusts or gratuity trusts set up for the benefit of employees, ‘holding companies‘ within the meaning of Section 4 of the Companies Act, 1956 etc. [Ref. Regulation 2(1)(b)]
q Who can Invest in AIF?
Competent investors, whether Indian, foreign, or non-resident Indian, can invest in AIFs, provided they have the required capital and willingness to invest in unlisted and illiquid stocks
Q Who is an ideal AIF Investor?
The specialized investment solutions provided by Alternate Investment Funds typically cater to a niche segment of Ultra-high net worth clients. These clients can be individuals or Institutional entities who require a dedicated investment management service.
The AIF platform is ideal for investors who:
- Seek to invest in asset classes like equity, fixed income, structured products, etc.
- Value a highly customized investment management solution
- Are discerning and appreciate a high level of client service
- Require investment advice for long-term wealth creation
Q Can an AIF raise any amount of funds from any investor?
An AIF may raise funds from any sophisticated investor whether Indian, foreign or non-resident Indians, who inter alia undertake risk of investing in primarily unlisted or illiquid securities. However, AIF (other than angel fund) shall not accept from an investor, an investment of value less than one crore rupees. In case of investors who are employees or directors of the AIF or employees or directors of the Manager, the minimum value of investment shall be twenty-five lakh rupees. [Ref. Regulation 10 (c)]
Q Whether an AIF can accept investments from joint investors?
An AIF may accept the following as joint investors for the purpose of investment of not less than one crore rupees: i. an investor and his/her spouse; ii. an investor and his/her parent; iii. an investor and his/her daughter/son. With respect to the above investors, not more than 2 persons shall act as joint-investors in an AIF. In case of any other investors acting as joint investors, for every investor, the minimum investment amount of one crore rupees shall apply. Joint investors shall mean where each of the investor contributes towards the AIF. [Ref. circular no. CIR/IMD/DF/14/2014 dated June 19, 2014]
Q As an investor, what is the expected time horizon I need to bear in mind?
Our funds are open-ended Funds without an initial lock-in period, subject to exit load as mentioned in PPM, with periodic intervals for subscriptions and redemptions.
Q Is conversion of AIF units from physical to demat mandatory?
Yes, as per the SEBI circular no. SEBI/HO/AFD/PoD1/CIR/2023/96 dated June 21, 2023, https://www.sebi.gov.in/legal/circulars/jun-2023/issuance-of-units-of-aifs- indematerialised-form_72921.html.
Q What are the risks associated with AIF investments?
There are several risks associated with investing in alternative investment funds (AIFs). One of the primary risks is the lack of liquidity, which means that investors may
not be able to exit their investments quickly or receive fair market value for them. Further, AIFs can involve higher levels of leverage than more traditional investments, thereby increasing risk exposure