Alternative Investment Funds (AIF) — Cat I, II, III
AIFs provide access to specialized strategies — venture capital, private credit/real‑estate, special situations, and long‑short public markets.
Minimum ticket is typically ₹1 crore; lock‑ins 3–8+ years; fees include management + performance (carry). Returns vary widely by manager and cycle.
Do deep diligence: read the PPM, understand the cashflow waterfall, risks, and governance. Allocate only a slice of net worth.
High ticketLock‑inManager selection
Ways to Invest
- Cat I: VC/SME/Infra/Social impact — early/growth capital with policy focus.
- Cat II: Private credit/real‑estate/debt‑oriented; steady IRR targets; lower volatility vs equity.
- Cat III: Long‑only/long‑short public markets; can use leverage/derivatives.
What to Check
- Audited track record and realized exits across cycles; team stability.
- Strategy clarity, sourcing edge, risk controls, valuation policy.
- Fee stack (mgmt + carry), hurdle, clawback, key‑man, conflicts.
- Reporting cadence, custodian/auditor, governance and LP rights.
Eligibility, Tax & Liquidity
| Aspect | Typical |
|---|---|
| Minimum ticket | ₹1 crore (some exceptions) |
| Tenor/Lock‑in | 3–8+ years, strategy dependent |
| Tax | Pass‑through elements differ by category; confirm latest rules. |
| Liquidity | Illiquid; secondary transfers sometimes possible. |
Real AIF Examples (India)
Representative SEBI-registered Alternative Investment Funds
Category I – Venture / SME / Social / Infrastructure
| AIF / Fund Name | Type | Sponsor / Manager |
|---|---|---|
| Blume Ventures Fund IV | VC / Early-stage Tech | Blume Ventures |
| Kalaari Capital Fund IV | VC / Growth-stage | Kalaari Capital |
| SIDBI Fund of Funds for Startups (FFS) | Government-backed VC FoF | SIDBI |
| TVS Capital Funds III | SME / Growth Equity | TVS Capital |
Category II – PE / Debt / Distressed Assets
| AIF / Fund Name | Type | Sponsor / Manager |
|---|---|---|
| Kotak Special Situations Fund | Credit / Distressed | Kotak Investment Advisors |
| Edelweiss Infrastructure Yield Plus | Yielding Infra Assets | Edelweiss Alternatives |
| HDFC Capital Affordable Real Estate Fund III | Real Estate / Affordable Housing | HDFC Capital Advisors |
| Tata Opportunities Fund II | Private Equity (Late-stage) | Tata Capital |
Category III – Long-short / PMS-style / Hedge
| AIF / Fund Name | Strategy | Sponsor / Manager |
|---|---|---|
| Avendus Absolute Return Fund | Long-Short Equity | Avendus Capital |
| IIFL Multi-Strategy Fund | Equity + Arbitrage + Derivatives | IIFL AMC |
| Alchemy Leaders of Tomorrow Fund | Concentrated Equity | Alchemy Capital |
| Torus Capital Long-Short Fund | Quant / Factor Long-Short | Torus Capital |
Education only; not investment advice. Markets carry risk; do independent due diligence.