AIF refers to privately pooled investment fund in the form of body corporate managing investment of domestic or foreign origin.In India, AIF’s are privately managed funds which are otherwise not coming under the jurisdiction of any regulations in india.

Also, it is defined under regulation 2(1) (b) of Securities and Exchange Board of India (Alternative Investment Funds) Regulations, 2012.

The minimum amount of investment is Rs. 1 crore only.

Categories of Alternative Investment Funds (AIFs) 

Category I

These AIF’s mainly invests in start- ups, SME’s or any other sector which government considers economically and socially viable like infrastructure projects. These AIF’s get special incentive from the government. Some of the category I AIF’s is mentioned below:

  • Venture capital funds (including angel funds)
  • SME funds
  • Social venture funds
  • Infrastructure funds

Category II

These AIF’s include private equity funds or debt funds. There are no any specific incentives or concessions given by the government or any other Regulator. Some of the category II AIF’s is mentioned below:

  • Real estate funds
  • Private equity funds
  • Distressed assets funds

Category III

These AIF’s trade with a view to make short term returns and are open ended. There are no specific incentives or concessions given by the government or any other Regulator for this category of AIF’s. Some of the category III AIF’s is mentioned below:

  • PIPE funds (Private Investment in Public Equity Funds)
  • Hedge Funds