Market regulator SEBI has allowed 73 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 past one year.
The 73 AIFs have been registered with the Securities and Exchange Board of India (SEBI) since July 2012.
SEBI had allowed 49 AIFs to set up shop in the country till April, and the number has increased to 73 as of Tuesday.
As per SEBI data, most of these applications got approval in November last year and March, February this year.
The AIFs that have registered with SEBI include KKR India, Arth Capital, Landmark Opportunity Fund, HBS Raksha Movies, Tata Alternative Investment Fund, Monsoon Alternative Investment Trust, DSP Blackrock Alternative Investment Fund and Edelweiss Alternative Investment Trust.
The regulator had notified the guidelines for this new class of market intermediaries in May 2012. AIFs are basically funds established or incorporated in India for the purpose of pooling in capital from Indian and foreign investors for investing as per a pre-decided policy.
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 it includes 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.