Alternate Investment Funds may soon be flush with money after the RBI notified that NRIs and foreign portfolio investors (FPIs) will be allowed to invest and trade in this category of funds.
AIFs are pooled-in investment vehicles for real estate, private equity and hedge funds. While NRIs were not allowed to invest in them, FPIs came in indirectly through various structures. There are around 200 AIFs registered with the Securities and Exchange Board of India (Sebi). But only 15-20 funds are active.
´The notification paves the way for foreign money to come into AIFs without FIPB (Foreign Investment Promotion Board) intervention and be treated as domestic capital subject to conditions,´ said Tejesh Chitlangi, partner at IC Legal. ´Also, downstream investment by an AIF shall be not regarded as foreign investment if the sponsor or the manager or the investment manager is Indian owned and controlled.´