Any privately pooled fund making its way from the domestic or international markets that in the Indian context is not controlled by any of the regulatory agency.
Primarily for investment by Indians into hedge fund, real estate and private equity, some approvals are also being sought for international investors and NRIs.
As per the Alternative Investment Fund regulations 2012, these fund categories are targeted mainly at the HNI folks with minimum investment of Rs. 1 crore. The size of the fund has to be a minimum of Rs. 20 crore and at any point in time there should be 1000 investors.
For the promoters or fund manager there is suggested a minimum of Rs 5 crore or 2.5% which ever is smaller.
As per the regulations, the AIF has to be registered in either of the three categories:
1. Category 1 : Which mainly puts money into SMEs, startups or areas considered to be socially and economically viable
2. Category 2: For investment in debt or equity class which is not incentivized by the government or any other regulator
3. Category 3: With investments in hedge fund or open ended schemes or where short returns are anticipated.
As now the avenue is kept open for foreign investors, more money inflows in the industry for a longer term is expected to boost the returns for the domestic investors as well in the times to come The industry has already doubled in a year's time and is likely to gain in a not so distant future.