SEBI Greenlights Two Additional Alternative Investment Funds
Enhancing Real Estate Investment Opportunities
The Securities and Exchange Board of India (SEBI) has granted approval to two more entities to establish Alternative Investment Funds (AIFs). This move is set to attract more investment into the real estate sector, alongside private equity (PE) and other hedge funds.
Recent Approvals and Pending Applications
- SEBI has approved two AIFs within a month, adding to the seven previously approved.
- As of August 31, 2012, approximately 20 applications were pending registration as AIFs.
Guidelines for AIFs Notified in May 2012
- AIFs are established or incorporated funds pooling investment from domestic and foreign investors, based on a pre-decided policy.
- Real Estate Opportunities Trust and Dicci Trust are the two newly registered AIFs, with the former promising more real estate investment.
Previously Registered AIFs with SEBI
- IFCI Syncamore India Infrastructure Fund
- Utthishta Yekum Fund
- Excedo Realty Fund
- KKR India Alternate Credit Opportunities Fund
- India Quotient Investment Trust
- Sabre Partners Trust
- Forefront Alternate Investment Trust
Equity Offloading by Promoters of Listed Companies
- In August, SEBI determined that 10% of equity to AIFs can be offloaded by promoters of listed companies.
- This equity can be in forms of SME Funds, PE funds, Venture Capital Funds, and Infrastructure Funds, provided it's registered with SEBI to achieve a minimum 25% public holding.
SEBI Guidelines for AIFs
- Category-I AIFs: Eligible for government incentives, includes Infrastructure Funds, Social Venture Funds, Venture Capital Funds, and SME Funds.
- Category-II AIFs: Can invest in any field but cannot raise debt except for operational requirements. Includes PE funds, debt funds, and others not falling under Category-I or III.
- Category-III AIFs: Focuses on short-term returns through trading, includes hedge funds.