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Front Page | May 2014

AIFs: The new alternative

 Alternative Investment Funds (AIFs), a newly created class of pooled-in investment vehicle for real estate, private equity, debt and hedge funds, have raised Rs 10,404 crore in FY14 against the total commitment of Rs 30,881 crore

The total investment made by AIFs during the year was Rs 6,809 crore. Meanwhile, the increase in the commitment as well as funds raised during the quarter ended March 2014 show that investors are still positive due to the prospects of a new government and favourable policies.

Under the Securities and Exchange Board of India (SEBI) guidelines, AIFs have been broadly divided into three categories.

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.

Category-II has no such concessions or incentives, including private equity funds and debt funds. Category-III includes those which can leverage their trades. Hedge funds come under this category.

During the year Category-I funds raised Rs 2,256 crore; Category-II raised Rs 5,955 crore, while assets under management for category-III funds were Rs 1,888 crore. Meanwhile, as per the data updated on the SEBI website, infrastructure funds under Category-I took the major share of those funds raised.

During the year, Category-I funds have raised a total sum of Rs 2,610 crore, of which Rs 2,256 crore was raised through infrastructure funds. Meanwhile, as far as commitment is concerned, of Rs 14,225 crore, the infrastructure commitment accounted for Rs 12,350 crore, according to SEBI data.

On a quarterly basis, the fourth quarter of FY14 has garnered better funding. During Jan-March, the total funds accumulated were to the tune of Rs 4,569 crore, as against Rs 2,833 crore in the preceding quarter. On the commitment front too, the quarter was much ahead with Rs 13,465 crore, as against Rs 11,186 crore from the previous quarter. Meanwhile, the total investment made by AIFs increased by 75.8 per cent in March 2014 quarter to Rs 3,348.30 crore as against Rs 1,904 crore.

Surprisingly, there was an increased inflow into infrastructure funds as well. "The increase in infrastructure funds is due to recent announcements and positive sentiments," says an analyst from Nomura.

During the period, although the total commitment for infrastructure funds was Rs 5,619 crore, Rs 607 crore has been raised as against Rs 555 crore, up by 8 per cent from the previous quarter. At present, there are more than 100 AIFs on the block of which eight funds belong to the infrastructure sector.

Oct-Dec

CategoryCommitments  raisedFunds raised  Investments made
Category I
Infrastructure Fund4945.67555.08169.31
Social Venture Fund434.3678.2125.3
Venture Capital Fund148.8842.65*9.16
SME Fund000
Category I  Total5528.91675.94203.77
Category II4821.581647.951222.67
Category III835.87559.6477.65
Grand Total11186.362833.491904.09

Jan-March

CategoryCommitments  raisedFunds raised  Investments made
Category I
Infrastructure Fund5619.25607.88170.25
Social Venture Fund428.2978.2138.91
Venture Capital Fund264.0970.6114.68
SME Fund000
Category I  Total6311.63756.7223.84
Category II6059.082906.572479.63
Category III1094.63905.78644.82
Grand Total13465.344569.053348.29

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