ALTERNATIVE INVESTMENT FUND ("AIF") LIFECYCLE

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1. AIF Lifecycle Overview

The entire process of setting up, managing, and exiting an AIF. The key stages include:

  1. Trust Deed Execution:

    • The fund's Settlor executes a trust deed with a Trustee.

    • The trust deed is registered with the sub-registrar.

  2. Document Drafting:

    • Key documents include the Private Placement Memorandum (PPM) and an Application to SEBI.

  3. Application to SEBI:

    • SEBI application (Form A) is submitted along with required documents.

    • An application fee of INR 1 lakh is paid.

  4. SEBI Approval:

    • The fund needs to comply with SEBI’s Alternative Investment Fund (AIF) regulations.

    • Approval is granted after paying the necessary fees.

  5. Investment Management Agreement (IMA) Execution:

    • This agreement is signed between the fund and the Investment Manager.

  6. Investor Onboarding:

    • A Contribution Agreement is executed between the Sponsor and Investors.

  7. Fund Closure & Commitment Collection:

    • AIFs must secure a minimum commitment of INR 20 Crores for their first closure.

    • Multiple closures can occur.

  8. Drawdown & Unit Allotment:

    • The fund issues a Drawdown Notice to collect contributions from investors.

    • Units are allocated to investors based on contributions.

  9. Investment Phase:

    • The AIF makes investments as per the guidelines in the PPM.

  10. Returns & Reinvestment:

  • The fund distributes investment gains or reinvests them.

  1. Reporting Obligations:

  • Regular reporting is required for investors, trustees, and SEBI.

  1. Exit Strategy & Fund Closure:

  • The AIF redeems units and formally closes the fund.

2. Key Regulatory & Financial Considerations

  • SEBI plays a crucial role in approving and monitoring the fund.

  • The process involves multiple legal agreements, including the Investment Management Agreement and Contribution Agreement.

  • The fund must meet minimum capital commitments before it can officially operate.

  • Returns can be distributed or reinvested as per the PPM.

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