What is an Alternate Investment Fund (AIF)
- Fund established or incorporated in India
- Privately pooled investment vehicle which collects funds from investors, whether Indian or foreign
- To invest in accordance with a defined investment policy for the benefit of its investors.
Category of AIF
- Category I AIF:
- Venture capital funds
- Angel Funds
- SME Funds
- Early stage investment
- Category II AIF
- Real estate funds
- Private equity funds
- Funds for distressed assets, etc.
- Category III AIF
- Hedge funds
- PIPE Funds
- Those requiring Complex trading strategies
- Investment in listed or unlisted derivatives.
What is ‘Angel Fund’
- “Angel fund” a sub-category of Venture Capital Fund under Category I
- Raises funds from angel investors
- Angel investor- Any person who proposes to invest in an angel fund and satisfies one of the following conditions,
- (a) an individual investor who has net tangible assets of at least two crore rupees
- excluding value of his principal residence
- Has early stage investment experience, or
- Has experience as a serial entrepreneur or
- Is a senior management professional with at least ten years of experience
What is ‘Angel Fund‘
- Can be a body corporate
- Net Worth of at least ten crore rupees
or
- A Registered VCF
Angel Fund Investment
- Angel funds shall accept up to a maximum period of 3 years
- Investment of not less than 25 lakh from an angel investor.
What is Debt fund
- Invests primarily in debt or debt securities of listed or unlisted investee companies
- These funds are registered under Category II.
- FUNDS shall not be utilized for purpose of giving loans.
What is Fund of Funds
- Fund of Fund is an AIF which invest in another AIF
Forms of Ownership
- A Trust
- A Company
- A Limited Liability Partnership
What is the corpus of the AIF
- Corpus is the total amount of funds committed by investors to the AIF by way of a written contract
Maximum number of investors
- Maximum number maximum 1000 investors for all non Angel Funds
- In case of an angel fund, Maximum forty-nine angel investors.
- AIF cannot make invitation to the public at large to subscribe its units
- Invite investors only through private placement.
Sponsor of the AIF
- Promoter in case of a company
- Designated partner in case of a LLP
- Main Trustee who incorporates the Trust for AIF
AIF launch schemes
- An AIF launches schemes after filing of placement memorandum with SEBI.
- an AIF is required to pay Rs. 1 lakh as scheme fees to SEBI while filing the placement memorandum.
- Such fee shall be paid atleast 30 days prior to launch of scheme
validity of the certificate of registration
- The certificate of registration of an AIF shall be valid till the AIF is wound up.
Registration fee paid TO SEBI
- Application fees Rs. 1,00,000
- Registration fee to be paid by an AIF is as under:
Category I Rs. 5,00,000
Category II Rs. 10,00,000
Category III Rs. 15,00,000
Angel Funds Rs. 2,00,000
Procedure for winding up?
Alternative Investment Fund shall be wound up:
- When the tenure of the AIF or all schemes launched by it is over;
or
- If seventy five percent of the investors by value of their investment in the AIF pass a resolution for winding up
- In case of a trust, if trustees decide to wind up in the interests of investors
- Once resolution is passed ,no further investments shall be made on behalf of the AIF so wound up.
- The assets shall be liquidated, and the proceeds accruing to investors in the AIF shall be distributed after satisfying all liabilities, within one year from the date of aforesaid intimation.
