Access Unlisted Alpha Beyond Public Markets.
Access Unlisted Alpha Beyond Public Markets.
Participate in high-growth private equity, venture capital, structured debt, and long-short hedge strategies. Aureva helps HNIs, UHNIs, and family offices curate SEBI-registered Category I, II, and III AIFs aligned with institutional-grade risk management.
₹1 Crore
SEBI Min Threshold
Cat I, II & III
Full SEBI Spectrum
Pass-Through Tax
Cat I & II Framework
What is AIF & How It Creates Value
Alternative Investment Funds (AIF) are privately pooled investment vehicles governed by SEBI under AIF Regulations, 2012. Designed for sophisticated investors, AIFs deploy capital across unlisted companies, venture capital, structured credit, and complex trading strategies to deliver superior risk-adjusted alpha.
Access to Private Equities
Invest in high-growth unlisted startups, pre-IPOs, and private enterprises before public market discovery.
Uncorrelated Portfolio Alpha
Diversify beyond listed stocks and bonds into alternative assets that remain insulated from daily stock market swings.
Pass-Through Tax Efficiency
Category I & II AIFs enjoy tax pass-through status, avoiding double corporate taxation at the fund level.
Specialized Niche Mandates
Participate in venture credit, real estate development funds, long-short hedge funds, and distressed debt strategies.
Institutional Governance
Governed under strict SEBI compliance, mandatory valuation audits, periodic reporting, and custodian safekeeping.
High-Conviction Capital Compounding
Lock-in commitments allow fund managers to make strategic, patient capital investments without redemption pressures.
The Three SEBI AIF Categories
SEBI classifies Alternative Investment Funds into three distinct categories based on their investment strategies, risk profiles, and tax treatment.
Category I AIF
Funds that invest in early-stage startups, social ventures, SME enterprises, infrastructure, and sectors considered economically advantageous by SEBI or the government.
Key Asset Mandates:
- Venture Capital & Angel Funds
- Infrastructure & Green Energy Funds
- SME & Social Venture Funds
Category II AIF
Funds that do not fall under Category I or III and do not undertake leverage except for operational requirements. Comprises the largest share of Indian private capital.
Key Asset Mandates:
- Private Equity (PE) Funds
- Structured Private Credit & Debt
- Real Estate & Pre-IPO Funds
Category III AIF
Funds that employ diverse or complex trading strategies and may employ leverage, including investments in listed derivatives, long-short strategies, and quantitative hedge models.
Key Asset Mandates:
- Long-Short Equity Hedge Funds
- Quantitative & Derivative Strategies
- Arbitrage & PIPE Funds
Comparing MF vs. PMS vs. AIF
Understand how Alternative Investment Funds differ from Mutual Funds and Portfolio Management Services in investment threshold, asset access, and portfolio structure.
| Feature | Mutual Funds (MF) | Portfolio Management (PMS) | Alternative Funds (AIF) |
|---|---|---|---|
| Minimum Investment | ₹100 (SIP) / ₹500 | ₹50 Lakhs (SEBI Mandate) | ₹1 Crore (SEBI Mandate) |
| Asset Ownership | Pooled Units (NAV) | Direct Securities in Demat Account | Private Class Units / Partnership |
| Target Asset Class | Listed Stocks & Bonds | Listed High-Conviction Stocks | Unlisted PE, Startups, Credit, Hedge |
| Tax Structure | Investor Level (STCG/LTCG) | Direct Ownership Capital Gains | Pass-Through (Cat I/II) / Fund Level (Cat III) |
| Ideal Investor Profile | All Retail & HNI Compounders | HNIs Seeking Direct Stock Equity | HNIs, UHNIs & Family Offices |
Why Invest in AIFs Through Aureva?
Navigating alternative assets requires deep due diligence into fund manager credentials, valuation benchmarks, hurdle rates, and fee carry terms. Aureva acts as your independent private capital consultant.
Unbiased Strategy Filtering
We objectively evaluate leading SEBI-registered Category I, II, and III AIF managers across India, analyzing deal flow pipeline quality and risk protocols.
Fee & Carry Structure Audit
We dissect management fees, hurdle rates, performance carry, and catch-up clauses before recommending any alternative fund commitment.
Multi-AIF Portfolio Architecture
Construct a balanced alternative asset allocation combining unlisted Private Equity (growth), Structured Credit (cash flow), and Long-Short Hedge strategies (downside protection).
Independent Due Diligence for Family Offices
Our role is to serve as your trusted private capital architect—providing personalized consultation led by founders to rigorously filter India’s premier alternative fund managers and build a resilient private market portfolio.
Our Advisory Philosophy
We align your wealth to your “why”. Alternative investing is not about speculative bets—it is about deploying patient private capital into high-conviction structural engines that compound over generational horizons.
Frequently Asked Questions on AIFs
Essential answers on SEBI regulations, taxation rules, minimum commitments, and lock-in periods for Alternative Investment Funds in India.
What is the minimum investment required for AIFs in India?
As mandated by SEBI (Alternative Investment Funds Regulations, 2012), the minimum investment amount per investor in an AIF is ₹1 Crore.
For directors, employees, or managers of the AIF, the minimum investment threshold is reduced to ₹25 Lakhs.
What are the main differences between Category I, II, and III AIFs?
Category I: Invests in early-stage startups, venture capital, social ventures, and infrastructure. Enjoys tax pass-through status.
Category II: Invests in private equity, structured debt, pre-IPOs, and real estate. Does not employ leverage and enjoys tax pass-through status.
Category III: Employs complex trading, derivative, and long-short hedge fund strategies. May use leverage and is taxed at the fund level.
How are AIFs taxed in India?
Category I & II AIFs (Pass-Through Status): Income generated by the fund (except business income) is passed directly to investors without tax deducted at the fund level. Investors pay tax according to their individual tax brackets and holding periods (LTCG / STCG).
Category III AIFs (Fund-Level Taxation): Tax is deducted and paid directly at the fund level at the Maximum Marginal Rate (MMR). Distributed income to investors is non-taxable in their hands.
What is the typical lock-in period and commitment tenure for AIFs?
Category I & II AIFs are closed-ended funds with a minimum tenure of 3 to 7 years (extendable by up to 2 years with investor consent). Capital is drawn down in tranches over the investment period.
Category III AIFs can be open-ended or closed-ended, offering monthly or quarterly redemption windows depending on the fund strategy.
Can NRIs and foreign entities invest in Indian AIFs?
Yes. Non-Resident Indians (NRIs), Persons of Indian Origin (PIOs), and Foreign Portfolio Investors (FPIs) can invest in Indian AIFs under RBI's Foreign Exchange Management Act (FEMA) guidelines.
Additionally, GIFT City (IFSC) based AIFs allow foreign investors to invest directly in USD-denominated units with 100% tax efficiency.
What is the fee structure typically charged by AIF managers?
AIFs operate on a 2-tier fee structure:
- Management Fee: Typically 1.5% to 2.5% per annum of committed or invested capital.
- Performance Fee (Carry): 10% to 20% of net profits above a pre-agreed Hurdle Rate (typically 8% to 12% IRR).
Speak With an Aureva AIF Consultant
Schedule a confidential, non-binding discussion to explore curated SEBI-registered Category I, II, and III AIF opportunities tailored for your family office.