Market regulator SEBI has allowed as many as 123 entities to set up AIFs – newly created class of pooled-in investment vehicles for real estate, private equity and hedge funds – in less than two-and-half years.

The 123 Alternative Investment Funds (AIFs) have been registered with the Securities and Exchange Board of India (SEBI) since July 2012.

Of these, around 34 entities got the market regulator’s approval to operate so far this year (January-November), 67 in 2013 and the remaining 22 in 2011.

The AIFs that have registered with SEBI in November are Religare Dynamic Trust, Indus Way Emerging Market Fund and Carpediem Capital Partners Fund and those registered in October are Singular India Opportunities Trust.

The regulator had notified in May 2012, the guidelines for this new class of market intermediaries. 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 making 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 private equity funds, debt funds or fund of funds, as also all others falling outside the ambit of above two other categories.

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