Here are 5 sites for profit from the Internet

 What is an Alternative Investment Fund (AIF)

AIF is an Alternative Investment Funds Regulations privately pooled funding car which collects budget from customers, whether or not Indian or overseas, for making an investment it in accordance with a defined investment policy for the benefit of its investors. AIF can be within the form of a trust or a organization or a restricted liability partnership or a body corporate.

Why AIF

AIF Regulations enterprise to increase the perimeter of regulation to unregulated price range with the intention to ensuring systemic balance, growing market efficiency, encouraging the formation of new capital and consumer protection.

Who aren't protected

Currently, the AIF Regulations do no longer practice to mutual funds, collective investment schemes, family trusts, ESOP and other worker welfare trusts, protecting organizations, special purpose motors, price range managed by way of securitisation or reconstruction businesses and any such pool of budget that is immediately regulated with the aid of another regulator in India.

Categories of AIFs

An AIF desires to are trying to find registration broadly underneath one of the 3 categories -

Category I AIF: The following are blanketed under Category I

1. Funds making an investment in start-up or early stage ventures or social ventures or SMEs or infrastructure

2. Other sectors or regions which the authorities or regulators keep in mind as socially or economically ideal which include the Venture Capital Funds

three. AIFs with tremendous spillover outcomes at the economic system, for which positive incentives or concessions is probably considered by using SEBI or Government of India or other regulators in India

Category II AIF: The following are protected beneath Category II

1. AIFs for which no precise incentives or concessions are given through the government or every other Regulator

2. Which shall not adopt leverage apart from to meet day-to-day operational requirements as authorized in those Regulations

3. Which shall include Private Equity Funds, Debt Funds, Fund of Funds and such distinctive budget that aren't classified as class I or III

Category III AIF: The following get covered beneath Category III

1. The AIFs such as hedge finances which change in an effort to making brief time period returns;

2. Which rent numerous or complicated trading strategies

3. Which may also employ leverage inclusive of through investment in indexed or unlisted derivatives

Applicability of AIF Regulations to Real Estate Funds

After understanding what an AIF is and its huge classes, we analyse whether AIF Regulations are relevant to the Real Estate Funds

Firstly AIF has to are looking for registration below AIF Regulations below one of the 3 categories stated above. Therefore if a Fund does now not fall under any of the three categories stated above, then it's going to not are searching for the registration with SEBI.

If we study the Category 1, registration is needed via price range which spend money on start-up or early degree ventures or social ventures or SMEs or infrastructure

If we look at the definition of infrastructure, Explanation to Regulation 2 (m) states that Infrastructure will be as defined with the aid of the Government of India on occasion.

And within the everyday parlance, the term generally refers to the technical structures that assist a society, together with roads, water deliver, sewers, electrical grids,

telecommunications, and so on, and may be defined as "the bodily components of interrelated systems offering commodities and offerings important to allow, maintain, or beautify societal residing conditions.

Therefore infrastructure does not encompass the actual property or production activity for the reason that this hobby deals in investing in land, developing the land by using manner of construction of apartments, townships and different residential and industrial initiatives.

But if the actual estate fund incorporates on sure tasks for a social reason like buying land for charity and so forth.; then the fund can be protected beneath social challenge finances.

The clause in addition states that 'or different sectors or areas which the government or regulators don't forget as socially or economically proper and such other Alternative Investment Funds as may be particular;'

The AIF Regulations had been notified only a few days again and till date, no different AIF price range were exact within the Category 1 by means of the Government. Further what the authorities or regulators don't forget as socially and economically viable is a very huge idea. However, until the Government specifically comes out with specific inclusions beneath Category 1; a Real Estate Fund will now not be blanketed under Category 1 and therefore might no longer require Registration.

Further, the clause additionally states that - Alternative Investment Funds which are usually perceived to have Superb spillover results on economic system and for which the Board or Government of India or other regulators in India would possibly remember providing incentives or concessions will bee covered

By including those traces to the Category 1, SEBI has made the class 1 very indistinct and open to dispute and litigations for the reason that what SEBI intends with fantastic spillover effects at the economy isn't always described or clarified. Different human beings or corporations may additionally have a extraordinary opinion in this which might lead to unnecessary litigations and hardships to commercial enterprise proprietors. However, till any readability comes in this, the enterprise proprietors want to take a cautious method to the selection of seeking Registration below AIF Regulations.

Category II AIF

Now we take a look at whether a Real Estate Fund falls beneath the Category II AIF

If we have a look at the budget protected with the aid of Category II above, they

1. Shall now not fall in Category I and III

2. Shall now not adopt leverage or borrowing other than to satisfy day-to- day operational necessities and as authorised by those regulations;

three. Shall be funded which include personal fairness price range or debt finances for which no unique incentives or concessions are given by way of the authorities or some other Regulator

For Real Estate Fund below Category I, we be aware that at gift it does now not fall below Category I and it also does now not fall below Category III considering those are essentially hedge funds. Further, no specific incentives or concessions are given by means of the Government to the Real Estate Sector. Therefore if we take a look at the applicability of Real Estate Fund below Category II, those funds can also fall below the Category II AIFs if they do not take leverage or borrowing except for short-time period necessities.

Impact of AIF at the Real Estate Funds

Under those Regulations, the minimal investment amount has to be Rs 1 crore from every investor. Therefore attracting the finances from the traders could turn out to be difficult for the real estate finances, who used to raise amounts as much less as INR 1 million from the buyers. Now they might need to discover excessive-price investors even though this is not the only undertaking that lies in advance for the ones elevating home corpuses. They now also must make investments 2.5% of the corpus or Rs 5 crore, whichever is lower, to make certain that the managing corporation's threat is aligned with that of the investor. Moreover, a unmarried funding in a corporation or a project can't exceed 25% of the entire corpus.

Further a Real Estate Fund registered inside the shape of an LLP also might be protected under the AIF Regulations. In an LLP Structure, because the buyers also are partners, the danger to the rights of the traders being misused could be very minimal. Therefore making use of the AIF Regulations to the LLP Structure could reduce the ability available to such a Structure.

Conclusion

If we observe the AIF Regulations from a brief time period attitude, in light of the hard fund elevating environment these days, the better price tag size for traders could doubtlessly throw up a few challenges and could in a way constrict the increase of the asset class, but certainly, ultimately, these policies seem to have an element of maturity to play a pivotal function within the development and shaping up of the destiny of trade asset magnificence in India. It is also clean that alternative investments are greater state-of-the-art and risky compared to investments in equity and debt and until marketplace matures it's far recommended that best HNIs and well informed investors make an investment in this asset elegance and as soon as the marketplace matures it's miles made open to all.  In the long term, we may additionally see extra investments in the Alternative asset elegance (in terms of quantum and maturity) due to the improved investor self assurance in those budget.