Market regulator, the Securities and Exchange Board of India (Sebi), has allowed 12 entities to set up Alternative Investment Funds (AIFs), a newly created class of pooled-in investment vehicles for real estate, private equity and hedge funds, in the last two months.
The 12 AIFs that have been registered with Sebi since October 10 included India Realty Fund, Dar Mentorcap Film Fund, Capaleph Indian Millennium Small & Medium Enterprises Fund and Capaleph Indian Millennium Private Equity Fund.
Sebi had already allowed nine AIFs to set up shops in the country. As on August 31, 2012, a total of 20 applications were pending with Sebi for registration as AIFs.
The regulator had notified in May this year the guidelines for a new class of market intermediaries named AIFs, which are basically funds established or incorporated in India for the purpose of pooling in of capital from Indian and foreign investors for investing as per a pre-decided policy.
Sebi in August decided that the promoters of listed companies can offload 10 per cent of equity to AIFs such as such as SME Funds, Infrastructure Funds, PE funds and Venture Capital Funds registered with the market regulator to attain minimum 25 per cent public holding.
Under Sebi guidelines, AIFs can operate broadly in three categories. The Sebi rules apply to all AIFs, including those operating as private equity funds, real estate funds and hedge funds, among others.
The Category-I AIFs are those funds that get incentives from the government, Sebi or other regulators and include Social Venture Funds, Infrastructure Funds, Venture Capital Funds and SME Funds.
The Category-III AIFs are those trading with a view to make short-term returns and include hedge funds, among others. The Category-II AIFs can invest anywhere in any combination but are prohibited from raising debt, except for meeting their day-to-day operational requirements. These AIFs include PE funds, debt funds or fund of funds, as also all others falling outside the ambit of two other categories.
Among other registered AIFs in the past two months are — Edelweiss Stressed & Troubled Assets Revival Fund Trust, IIFL Private Equity Fund, IIFL Opportunities Fund, IIFL Venture Fund, Quant First Alternate Investment Trust, Fulcrum Venture India Trust, Kedaara Capital and Arcus Opportunities Fund.