Can I approach LPs before SEBI registration is complete?

You can initiate conversations and build your pipeline during the in-principle approval period, but you cannot accept commitment letters or any capital until SEBI grants full registration under Regulation 3 of the SEBI (Alternative Investment Funds) Regulations, 2012. Running a soft pipeline in parallel with your registration application is standard practice for experienced GPs.

What is the minimum corpus for an AIF scheme?

Each scheme of an AIF must have a minimum corpus of Rs. 20 crore under Regulation 10(c) of the SEBI (Alternative Investment Funds) Regulations, 2012. For Social Impact Fund schemes, the minimum is Rs. 5 crore. Angel Funds are excluded from this minimum.

How many investors can an AIF have?

A standard AIF scheme is capped at 1,000 investors. Angel Funds are capped at 200 investors per scheme. As of SEBI's September 2025 amendments, Accredited Investors are excluded from the 1,000-investor count, allowing GPs targeting only accredited capital to scale without breaching the cap.

Can an insurance company invest in a Category III AIF?

No. Insurance companies are restricted to Category I and Category II AIFs under Section 27E of the Insurance Act, 1938, and cannot invest in AIFs that use leverage beyond operational requirements. Banks face a similar restriction — they are not permitted to invest in Category III AIFs except as sponsor of a bank subsidiary managing a Category III fund.

Is a family office in India eligible to invest in an AIF?

Yes. A family office structured as an LLP, company, or trust can invest in an AIF subject to the Rs. 1 crore minimum commitment under the SEBI (Alternative Investment Funds) Regulations, 2012. If the family office pools capital from multiple family members or external investors and is itself acting as a fund-like structure, it may require AIF registration with SEBI. LP counsel should confirm the family office's own regulatory status before onboarding.

What carry structure is standard for a Category II AIF in India?

The market standard for Category II AIFs in India is 20% carry above an 8% hurdle rate per annum on committed capital (or invested capital, depending on the waterfall structure). First-close anchor LPs sometimes negotiate the hurdle up to 8.5–9%. Full catch-up carry — where the GP receives 100% of profits above the hurdle until the 20% carry is achieved — is common, but LPs increasingly negotiate a modified catch-up or no catch-up provision.

Can a GP offer different management fees to different LPs in the same AIF?

Yes, as long as the variation is by close, not by individual LP within the same close. First-close LPs may receive a lower management fee (for example, 1.75%) versus second-close LPs (2%). All LPs within the same close must receive the same terms. This tiered structure must be explicitly set out in the LP agreement.

What is the GP's minimum co-investment requirement in its own AIF?

Under Regulation 10(d) of the SEBI (Alternative Investment Funds) Regulations, 2012, the manager or sponsor must commit 2.5% of the corpus or Rs. 5 crore, whichever is lower, as a continuing investment in the fund. This commitment must be maintained throughout the fund's life and cannot be redeemed ahead of other investors.

How long does it typically take to raise an AIF from first LP conversation to final close?

For a well-prepared first-time GP with a Rs. 100–200 crore target and a primarily HNI and family office LP base, 12–18 months from first LP conversation to final close is realistic. Institutional LPs add 4–6 months to the timeline due to internal approval processes. GPs who close faster typically have an existing relationship with their anchor LP, clean fund documents from day one, and a defined LP outreach sequence rather than a broad simultaneous approach.

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Home > Finance > How to Raise Capital for an AIF in India: LP Strategy for First-Time GPs

How to Raise Capital for an AIF in India: LP Strategy for First-Time GPs

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Published on

April 27,
2026

Last updated on

April 27, 2026
18:26

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How to Raise Capital for an AIF in India: LP Strategy for First-Time GPs

Written By

Published on

April 27,
2026

Last updated on

April 27, 2026
18:26

Share

Got your SEBI registration. Now raise the corpus.

Let's Talk

Startup

Investor

Going Global

Startup

Investor

Going Global

How to Raise Capital for an AIF in India: LP Strategy for First-Time GPs

Written By

Published on

April 27,2026

Last updated on

April 27, 202618:26

Share

Got your SEBI registration. Now raise the corpus.

Let's Talk

April 27,
2026

April 27, 2026
18:26