An Analysis On Alternate Investment Fund (AIF)
- IJLLR Journal
- Feb 14
- 1 min read
Abhin Behl & Srishti Vasandani, Amity Law School, Noida
Introduction
In India, alternative investment funds (AIFs) are defined in Regulation 2(1) (b) of Securities and Exchange Board of India (Alternative Investment Funds) Regulations, 20121. It refers to 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 (LL P). Hence, in India, AIFs are private funds which are otherwise not coming under the jurisdiction of any regulatory agency in India.
In the context of the Securities and Exchange Board of India (SEBI) regulations, an investor getting a unit listed on a stock exchange for free trade in an Alternate Investment Fund (AIF) can refer to specific provisions regarding the listing and trading of AIF units.
1. Alternate Investment Fund (AIF) Categories2:
SEBI regulates AIFs under the SEBI (Alternate Investment Funds) Regulations, 2012.
AIFs are private investment vehicles that pool capital from investors to invest in
accordance with a defined investment strategy.
AIFs are typically classified into three categories:
o Category I AIFs: Funds that invest in start-ups, small and medium-sized enterprises (SMEs), social ventures, etc., which are considered to have a positive impact on the economy.
o Category II AIFs: Funds that do not have a specified focus but are not categorized as Category I or III. This category includes private equity funds and debt funds.
o Category III AIFs: Funds that employ diverse or complex trading strategies, including hedge funds.
