AIF

Alternate Investment Funds or AIF primarily means any fund incorporated in India that serves as a privately pooled investment vehicle and gathers money from multiple affluent investors, whether domestic or foreign, to invest. All the investments are done in accordance with well defined specified investment policy for the benefit of its investors.

Mutual Funds are excluded from AIF due to retail investor participation.

AIF is divided into 3 Categories and includes different funds in each of its categories. 

AIF Category I

AIFs that invest in SMEs, infrastructure, social enterprises, start-ups, or early-stage businesses are among the sectors and areas that the government and regulators deem to be beneficial from an economic and social standpoint.

CAT I includes Venture Capital funds (Including Angel funds), SME Funds, Social funds, special situation funds, and Infrastructure-related funds like REITs and INVITs.

CAT I investments are close ended and have a minimum tenure of 3 years.

AIF Category II

This fund invests primarily in debt or debt related securities of listed or unlisted companies according to the stated objectives of the fund. Funds for which no specific incentives or concessions are given by the government or any other Regulator are included under this Category.

Various types of funds include real estate funds, private equity funds, and funds for distressed assets.

CAT II investments are also close ended and have a minimum tenure of 3 years.

AIF Category III 

Different types of funds including Hedge funds, PIPE funds, etc. are registered under CAT III. It uses a variety of intricate trading techniques and may use leverage, such as investing in listed or unlisted derivatives.

CAT III investments are open-ended.

Minimum investment in all 3 categories is ₹ 1 Cr. except for Cat I Angel fund where the ticket size is ₹ 25 lakhs