Indian Association of Alternative Investment Funds (IAAIF)
Indian Association of Alternative Investment Funds (IAAIF)
Indian Association of Alternative Investment Funds (IAAIF)
• Total commitments raised by AIFs Industry is INR 702 billion as of December 2016
• Of the total commitments raised, Category II AIFs contribute to the largest share at 58%
followed by Category I AIFs at 27%.
• Majority of funds are in the form on Infrastructure and Venture Capital Funds
Venture
Capital Fund
Category II 22%
58% SME Fund
2%
Source: SEBI, Based on capital commitments Source: SEBI, Based on capital commitments
AIF Industry - Overview
Sector Focus
Diversified,
57.3% Equity, 76.5%
Real Estate,
24.0%
Media, 1.8%
• Most funds have a diversified focus . • Most funds are equity funds
• Real estate emerges is a prominent industry • Among the debt funds, a large part of the
for AIFs which have single-sector investment AIFs are real estate based AIFs
strategy
Note: Based on a sample of 171 AIFs for which data was available in public Note: Based on a sample of 166 AIFs for which data was available in
sources. Percentages based on # of AIFs public sources. Percentages based on number of AIFs
Segmenting AIFs
Manager/ Manager and sponsor can be the same Sponsor is different from manager. Sponsor has
Sponsor to contribute not less than 40% to the net worth of
the AMC.
Category I and II AIFs should be Closed
Fund Types A Mutual Fund can be both Closed Ended or
Ended; Category III AIF can be both
Open Ended funds.
Closed Ended and Open Ended
The minimum subscription amount of debt
oriented and balanced schemes at the time of
new fund offer shall be at least Rs 20 crores and
Minimum An AIF should have a minimum corpus of
that of other schemes shall be at least Rs 10
Corpus Rs 20 crores.
crores. An average AUM of Rs 20 crore on half
yearly rolling basis shall be maintained for open
ended debt oriented schemes.
Minimum investment size for an AIF is Rs
Minimum 1 crore. However, if investors are Depending on the mutual fund scheme, AMC will
Investment employees/directors of the AIF or mention in offer document the minimum
by Investors employees/directors of the Manager, then investment amount.
minimum investment value is reduced to
Rs 25 lakh. 7
Comparison with Mutual Funds
Listing in Listing is permitted but there is no Every closed ended scheme, other than an
Exchange compulsion for AIFs to list units on an equity linked savings scheme, has to be listed on
exchange. a recognized stock exchange.
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Segmenting AIFs
Pre-tax returns
Alternatives: Equity/Real Estate
AIFs
18%
VC Funds: >18%
Direct RE: 18%
Alternatives: Hybrid / Debt /
Structured Papers Private Equity: 16 – 19%
16%
Small Cap MF: 16%
Ultra low risk Low risk Medium Risk High risk Ultra high risk 10
Segmenting AIFs
Private Placement – AIF Units can only Taxation – Cat I and II AIFs are tax pass
be placed through a private placement through vehicles. The AIFs do not pay any
No. of Investors – No AIF Scheme can tax and also do not suffer any Tax
have more than 1000 investors Deducted at Source (TDS) for interest
Minimum Commitment – Minimum payments.
Commitment from investors is INR 1 • 10% withholding is done while
crores (INR 25 lakhs in case of employees making distributions
of Sponsor/Manager) • For offshore investors, the rate of
Conflict of interest – All such situations withholding to be determined based
must be avoided and in case unavoidable, on DTAA
adequate disclosures must be made for Foreign Investments - AIFs have been
the same permitted by both SEBI and RBI for
accepting foreign investments
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Segmenting AIFs
14
Investor Landscape and considerations
Domestic
International
Retail
Investors
Investors
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Segmenting AIFs
18
Segmenting AIFs
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Investors: Things to Keep in Mind
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THANK YOU….
Questions?