The Expansion Of AIF Universe In India

Sophisticated investors investing in India are no longer required to settle for the fund. Increasingly, they want the deal, i.e., the specific, high-conviction opportunity sitting inside the fund’s portfolio. The shift of interest in investors is reshaping the Alternative Investment Fund (“AIF”) universe in India and two regulators would need to be considered: Securities Exchange Board of India (“SEBI”) on the securities side, and Reserve Bank of India (“RBI”) on the foreign exchange side.

An AIF is a privately pooled investment vehicle that can be structured as a company, limited liability partnership (“LLP”) or trust. AIFs aggregate capital from investors specifically high net worth individuals (“HNIs”) and institutional investors, both resident in India and based outside India, to deploy into various asset classes. Governed by the SEBI (Alternative Investment Funds) Regulations, 2012 (“AIF Regulations”), the investment manager (“IM”) exercises discretion over where and when to