Categories of Alternative Investment Funds are registered and regulated as per the SEBI (Alternative Investment Funds), 2012. They are privately pooled investment vehicle who are in the business to collect funds from the sophisticated investors either Indian or otherwise and utilize them for the making the investment as per their policies.
Categories of AIF
As we know the gist of the fact that there are three categories of Alternative Investment Funds, in this blog we will discuss in detail the categories of AIF. AIF regulation have clearly specified as 3 different categories of AIF, then can be registered in Regulation 3 (4) of chapter 2.
As per Alternative Investment Fund regulation, registration can be done with SEBI under any 3 of the three below mentioned category:-
Category I
Under this category those funds are considered which can give good effect in the Indian economy. For example, if an investor is investing in startup, small and medium sized enterprise etc, then it is considered as good investment as these may give good effect in the economy of the country. These sectors are considered as socially or economically desirable and as result, government and sectors also gives discount, concession or incentive to them.
Category I AIFs includes-
- Venture Capital Funds
- SME Funds
- Social Venture Funds
- Infrastructure Funds etc.
Category II
Basically those which do not fall under category I and III fally under this category. They only take leverage and borrowings to meet operational requirements and such other activities permitted by the AIF regulations.
Category II includes-
- Private Equity Funds
- Debt Funds Etc.
Category III
Under this category diverse and complex trading strategies, unlike the other two categories. They can even make an investment in listed as well as unlisted derivatives.
This category includes
- Hedge Funds
- Funds which trade with an objective to make short term returns
- Funds which are open ended etc.
Along with the application fees of Rs. 1,00,000/- is to be paid, where no fees for its registration is required to pay.