Definition
What is an AIF (Alternative Investment Fund) in India?
An AIF (Alternative Investment Fund) is a pooled investment vehicle registered with SEBI under AIF Regulations 2012. AIFs invest in alternative asset classes beyond traditional mutual funds. Three categories: Cat I (VC/SME/infra), Cat II (PE/debt), Cat III (hedge/listed).
Categories
Three categories.
- Category I: VC funds, SME funds, social venture funds, infrastructure funds. Tax pass-through.
- Category II: Private equity funds, debt funds, real estate funds. Tax pass-through.
- Category III: Hedge funds, PIPE funds, complex strategies. Taxed at fund level (no pass-through).
Investor requirements
Investor requirements.
- Minimum investor capital: ₹1 crore per investor
- Maximum 1,000 investors per scheme
- Sponsor commitment: 2.5% of fund or ₹5 crore (whichever lower)
- Closed-end (Cat I/II) or open-ended (Cat III)
- Lock-in: 3 years for Cat I/II
Setup process
Setup process.
- Decide on AIF category and strategy
- Form fund vehicle: trust (most common), LLP, or company
- Apply to SEBI for AIF registration (Form A)
- Pay SEBI fee (₹5L for Cat I/II, ₹10L for Cat III)
- SEBI review: 8-16 weeks
- Fund documentation: PPM, contribution agreement, IMA
- Launch scheme — first close usually within 12 months