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Alternative Investment Fund (AIF) | Real Estate

A SEBI Registered Category || Alternative Investment Fund (AIF)
Market size of
CAT II AIF

INR 7.82 Lakh
Crore*

Designed to cater to pan-India Grade-A projects, with a primary focus on commercial real estate assets
*Source: SEBI As of 30th September 2023
18% to 20%
Expected IRR
INR 500 Cr
Inclusive of INR 250 Cr greenshoe option
Aif Funds

Our CAT II AIF (Alternative Investment Fund) is designed to cater to pan-India Grade-A projects with a primary focus on commercial real estate assets.This includes a wide range of commercial projects such as offices, retail spaces, data centers, warehouses and hospitals across under-construction, pre-leased and other completed/operating assets.

By investing in commercial assets at various stages of development our AIF offers investors a diversified portfolio that capitalizes on the flourishing Indian real estate sector and can anticipate a targeted Internal Rate of Return IRR ranging from 18% to 20%.

Alternative Investment Fund

hBits Real Estate Fund I

Real Estate Fund I a SEBI-registered CAT II AIF with INR 500 Cr target equity investments in top-tier Indian commercial real estate particularly in income- generating Pre-Leased and Under Construction Grade-A CRE properties including offices and warehouses.

IRR Expectations

Why Invest now?

Locking in long-term deals at current rates will be advantageous for investors as rates have peaked.
India's commercial real estate market is poised to reach USD 1 trillion by 2030, maintaining its appeal as an attractive investment hub.

Investment Focus

Our fund explores investment opportunities at every phase of real estate development, from projects under construction to assets with existing lease agreements.

As a dedicated Commercial Real Estate (CRE) fund, we target investments in office complexes, data hubs, storage facilities, industrial zones, educational institutions, and hospitals across India, with a particular emphasis on the leading six cities.

Minimum Investment In AIF

Preleased

Investment Allocation: 50-60%

(Grade-A pre-leased assets with strong occupiers residual lock-in period and periodic escalations)

Best Alternative Investment Funds AIF

Under construction

Investment Allocation: 40-50%

(Early-stage construction with land and all regulatory approvals in place)

Investment Thesis

AIF Alternative Investment Funds

100% Deal Sourcing

Investment opportunities of over INR 2,500 Cr across the top six cities (MMR, Pune, Bangalore, Hyderabad, Chennai and NCR) are sourced month on month by the buy-side team.

50% Evaluation

Yield expected capital appreciation, location, micro market analysis, data insights ( comparables, financial projections, developer, occupier profiles and lease terms).

20% Shortlist

After evaluating basis the above given criteria, keeping in mind the investors’ goals and desired IRR, the investment opportunities are shortlisted.

<1% Transaction

After carrying out legal and title, asset level, technical, financial and tax diligence (in the case of SPV acquisition), the asset is acquired.

Investment Thesis

Invest In AIF

Why hBits?

Aif Funds

50+ Years of combined management experience in Commercial Real Estate

Aif Funds

200+ Years of experience and personal ownership in end-to-end commercial real estate development and management

Aif Funds

Backed by marquee names in the Commercial Real Estate space

Aif Funds

Pipeline of over INR 25,000 crore of Grade-A assets (originated since Nov 2022) with an average of INR 2,500 crore across office, warehouse, industrial and educational institutions

Our Investments

On Sale
50%
Funded
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French Listed Tech MNC

Thane (West) Mumbai

Asset Value₹54.66 Cr
Entry Yield8.75%
Expected IRR15.16%
Tenant
tenet-img
View Details
Invest Now
On Sale
50%
Funded
property image
property image

French Listed Tech MNC

Thane (West) Mumbai

Asset Value₹54.66 Cr
Entry Yield8.75%
Expected IRR15.16%
Tenant
tenet-img
View Details
Invest Now
On Sale
95%
Funded
property image
property image

London Listed MNC

Langford Road - CBD Bengaluru

Asset Value₹28.8 Cr
Entry Yield8.75%
Expected IRR15.12%
Tenant
tenet-img
View Details
Invest Now
View all opportunities

FAQs on AIF (Alternative Investment Funds)

Below are some benefits of investing in AIFs:

Diversification: Investors can reduce risk and maintain returns by diversifying their portfolios, which is especially important for High-Net-Worth Individuals (HNIs) with larger investments. AIF can serve as a hedge during market volatility, thereby enabling portfolio diversification.

High returns: AIFs can deliver higher returns to investors compared to other options. The funds are managed by a professional fund manager who can prepare flexible strategies for maximizing returns.

Low volatility: Real Estate AIFs are not linked with the stock market. Therefore, the volatility is less in these funds.

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Introduction To Alternative Investment Funds AIF

Explore the world of commercial real estate through alternative investment funds AIF with hBits Indias leading platform for investors.
In the financial landscape, Alternative Investment Fund AIF has seen the sharpest growth in the recent years. It combines the stability of real estate investments with the flexibility of alternative investment strategies. We prioritize due diligence and carefully tailored investment strategies to ensure long-term stability.

Whether you are an experienced investor or just starting, we are here to provide you with an exceptional opportunity to diversify and expand your wealth through Alternative Investment Funds (AIF). We take pride in our accomplished team, which is dedicated to delivering consistent returns.

Importance And Growing Trend Of AIF Alternative Investment Funds In The Financial World

AIF funds significance in financial markets is essential for creating a portfolio, allowing investors to participate, secure their future, and achieve remarkable financial freedom.

It is a lucrative market that has seen substantial growth in recent years due to evolving regulations. Regulatory changes have made establishing and operating AIFs easier, encouraging more investors to enter the market. Additionally, the growth in AIF alternative investment funds is driven by the need to diversify risk across multiple asset classes.

AIF alternative investment funds allow investors to diversify their portfolios by pooling funds from various sources and investing in commercial real estate properties. By spreading risk across different assets, investors can mitigate potential losses.

High-net-worth individuals and institutional investors both benefit from parking their funds in AIFs. Accessibility and liquidity allow investors to acquire high-priced real estate holdings, which generate income and, in turn, increase their capital.

This emerging trend is one to monitor closely. This form of investment encompasses access to lucrative commercial real estate properties, an opportunity to diversify, mitigate risk, enhance liquidity, and flexibility to achieve optimal returns.

AIF Alternative Investment Fund Strategies For Optimal Portfolio Growth

We have highlighted the potential of AIF investment as it is an attractive investment option. At hBits, we ensure the portfolio stays robust and optimizes the risk-return ratio. Our goal is to meet the needs of investors of varying risk profiles.
  1. Professionally Managed Funds: As the experts deeply understand market trends, their expertise in selecting the AIF alternative investment fund and managing properties leads to superior returns.
  2. Premium Assets: AIF funds often invest in premium properties, and investors can access them by pooling resources. It allows maximum growth potential for their portfolios, tapping into a wide range of promising investment options.
  3. Risk Mitigation: A well-thought-out investment strategy safeguards investments to meet investors long-term financial goals. It is achieved through due diligence, active management, and diversification.
  4. Vast Network: Esteemed AIF fund managers have extensive networks in real estate, which can add value to the projects and cost-saving initiatives to benefit the investors.
  5. Passive Income: Consistent cash flow can be a valuable source of passive income, helping investors achieve financial goals and success.
  6. Liquidity Options: AIF alternative investment funds are highly liquid and provide flexibility to the investors to access funds.
  7. Balanced Approach: The core strategy is to ensure growth and offer stability in the long run. The aim is to align the investors long-term goals and vision for optimal portfolio performance.
  8. Diversification: Diversification provides a solid foundation to spread risk and park investors funds in plush properties, paving the way for sustainable growth across asset classes.
By employing these tactics, AIF funds aim to give investors stable income, capital appreciation, and significant rewards that can help investors realize their portfolios full potential.

AIF Minimum Investment Requirements

The prerequisite for minimum investment in AIF is as follows:
  1. An AIF must have a corpus of at least Rs. 20 crores (an Angel Fund needs only Rs. 5 crores)
  2. The minimum amount an investor can invest in an Alternative Investment Fund is INR 1 crore. However, each investor must put at least Rs. 25 lakhs to get in on the Angel Fund.
  3. An Alternative Investment Fund Manager employee or director must invest at least Rs. 25 lakhs.
Under SEBI, the AIFs can be primarily classified into the following three categories:
  • Category I:
    1. Venture Capital Funds- The minimum amount must not be less than 5 lakhs. VCFs contribute to the economy by raising capital for startups and entrepreneurs.
    2. Infrastructure Funds- Focuses on facilitating investment in the infrastructure development of the public sector, like railways, airports, logistics, etc. Therefore, regarding infrastructure funds, a trustee must be registered with SEBI and invest 80% of infra assets to generate income. At the same time, a sponsor can be a promoter or a company with a net worth of a minimum of Rs. 100 crore to classify as a sponsor. Additionally, they must hold at least 15% of the total investment with a minimum of 3 years of the lock-in period. The structure of infrastructure funds also includes a project and investment manager.
    3. Angel Funds- Angel investors bring management expertise to guide startups and entrepreneurs. It is a subcategory of Venture Capital. The minimum investment required by an angel investor is Rs. 25 lakhs.
    4. Social Venture Funds-This type of venture focuses on investing in socially responsible companies that aim to bring real change in society. The fund size of Social venture funds must be Rs. 20 crores, while the minimum investment is 1 crore.
  • Category II:The AIF minimum investment across the second category is Rs. 1 crore. hBits caters to high-net-worth individuals by providing services under the second category.
    1. Private Equity Funds (PE)- PE funds invest in unlisted private firms and acquire a stake. Since unlisted private firms cannot issue stock or debt, they seek PE funding. These businesses also offer diverse equity portfolios, reducing investment risk. PE fund investment horizons are usually 47 years. The company aims to exit the investment after 7 years profitably.
    2. Funds Of Funds- The name of this fund gives away the fact that it is a pooled portfolio of numerous Alternative Investment Funds. Rather than creating its portfolio or choosing a specific industry, the funds investment strategy is to invest in a portfolio of other AIFs.
    3. Debt Funds-Companies with poor credit ratings often issue high-risk, high-yield debt products. Companies with strong development potential, solid corporate procedures, and capital constraints are suitable debt fund investments.
    4. Distressed Assets- Invest in opportunities created by specific events like mergers, bankruptcies, or regulatory changes.
    AIFs provide HNIs and ultra-HNIs with access to different investment strategies for diversifying their portfolios. Private equity and debt investments allow them to participate in private markets and increase their risk-adjusted returns.
  • Category III:
    1. Hedge Funds- Financial institutions and accredited investors pool their money to form hedge funds. These funds put their money into debt and stock markets in domestic and international markets.
    2. Private Investment In Public Equity Fund(PIPE)- Shares in publicly listed corporations are the target of a PIPE investment. It is a fund for investing in public companies that is privately managed and uses assets raised privately.

Factors Influencing The Minimum Investment In AIF And Its Variations

The following factors influence the minimum investment in AIF:
  1. Fund Type and Strategy- Different AIFs may have varying investment strategies and requirements. For example, a real estate development fund might have a higher minimum investment than a fund focused on income-generating properties.
  2. AIF Category- The three groups have different minimum investment and corpus requirements.
  3. Market Conditions- The overall real estate market conditions, including supply and demand dynamics, interest rates, and economic indicators, can impact minimum investments. In a competitive market, minimum investments may be higher.
  4. Location-Due to differences in local rules and market conditions, minimum investment in AIF requirements may vary by location.
  5. Fund Size-A minimum investment may be required depending on the total value of assets in the AIF. Smaller funds may have higher minimums to cover overhead costs and have a diverse portfolio.
  6. Risk Profile-To mitigate risk and attract investors comfortable with this level of risk, AIFs with higher-risk strategies may require larger investments.
  7. Lock-up Period-Investors funds in some AIFs may be locked up for a while before they can be withdrawn.
  8. Regulatory Guidelines-Each type of AIF may have its minimum requirements outlined in the SEBI regulations.

Benefits Of AIF Investment

AIF Investment has numerous advantages, including:
  1. It Promotes diversification in a wide range of assets across equity, debt, structured finance, and real estate.
  2. It has a higher return potential due to its flexibility—a great source of passive income.
  3. Fewer rules govern AIFs, giving them more freedom to pursue various investing strategies.
  4. AIF investment targets rapidly expanding industries, allowing investors to profit from the sectors rapid development.
  5. Investments in alternatives can come with favorable tax treatment. Although the particular advantages of each investment may differ, many alternative investments are eligible for reduced capital gains taxes.
  6. AIF funds have lower volatility than standard stock investing. It may appeal to risk-averse investors seeking stability.

AIF Investment Contributes To Portfolio Diversification

Adding AIF investments to a portfolio is a great way to broaden the investment base and lower the risk profile. Unlike more familiar asset classes like stocks and bonds, AIFs include private equity, real estate, debt, and funds of funds. By investing in AIFs, investors can spread their risk and receive exposure to several different asset classes that tend to move independently of one another rather than in lockstep with the traditional market.

Since various assets react differently to economic changes, this lower degree of correlation cushions the portfolio against volatility. Therefore, AIFs can serve as a balancing factor in a diversified portfolio, improving returns relative to risk. They are also helpful in managing risk and improving long-term financial stability since they give entry to alternative strategies that can produce returns uncorrelated with traditional assets.

Regulatory Compliance and AIF Funds: What You Need to Know

AIF Funds must comply with the SEBI Regulations (Alternative Investment Funds) rules, 2012.
In India, AIFs are subject to regulations from the market regulator on registration, compliance, and ongoing reporting.
Heres what you need to know:
  • AIF Manager Oversight:
    1. AIF managers are regulated entities.
    2. Licensing and reporting obligations.
  • Investor Eligibility:
    1. AIFs are typically for professional/sophisticated investors.
    2. Income/net worth thresholds often apply.
  • Disclosure and Transparency:
    1. Regular reporting to investors is required.
    2. Information on performance and portfolio holdings.
  • Risk Management:
    1. AIF Funds managers establish risk controls.
    2. Protecting investor interests through risk mitigation.
  • Valuation and Pricing:
    1. Guidelines for accurate asset valuation.
    2. Preventing conflicts of interest and fraud.
  • Marketing and Distribution:
    1. Regulations on how AIFs can be marketed.
    2. Mandatory disclosure in marketing materials.
  • Regulatory Reporting:
    1. AIF managers report to regulatory authorities.
    2. Ensures compliance and allows regulatory oversight.
  • Importance of Compliance for Investors:
    1. Investor Protection: Compliance safeguards investor interests.
    2. Transparency: Regulatory compliance ensures accurate information.
    3. Risk Mitigation: Compliance reduces the likelihood of losses.
    4. Legal Consequences: Non-compliance can lead to legal actions.
    5. Reputational Impact: Compliance upholds trust and reputation.
    6. Informed Decisions: Compliance aids in making sound investment choices.

AIF Funds vs. Traditional Investment Options: A Comparative Analysis

Heres a comprehensive comparison of AIF funds and traditional investment options.
ParameterAlternative FundsTraditional Investment
Minimum RequirementHigh, typically suited for high-net-worth individuals and institutionsVaries, often accessible to retail investors
Risk ProfileThe risk can be higher due to exposure to alternative asset funds like real estateGenerally lower risk, based on asset classes
ReturnsHighly volatile but provides higher returnsGenerally more stable, moderate returns
TransparencyIt may offer limited transparency depending on the AIFHigh transparency and easy access to information
Entry/Exit RestrictionsOften have restrictions on entry and exitUsually more flexible in terms of entry and exit
AccessibilityAccessible for accredited investorsAccessible to a broader range of investors

How to Invest in AIF: Step-by-Step Guide for Novice Investors

Here are all the steps you need to know to invest in AIF .
  1. Research about AIF investments and their various categories. Familiarize yourself with the different types of investment and their characteristics.
  2. Determine your investing goals, risk tolerance, and timeline. Aligning your goals with the correct AIF category is crucial because AIF risk and return will vary widely.
  3. SEBI sets qualifying requirements. AIFs usually accept high-net-worth individuals and institutional investors.
  4. Research and choose an AIF that matches your investing goals. Consider the funds performance, management competence, and portfolio assets.
  5. Examine the funds performance, fees, and investing approach. Request and study the funds offering documents, including the PPM.
  6. Complete KYC and send paperwork to the AIF and fund management. This contains ID, address, and financial statements.
  7. Your AIF investment amount must meet the funds minimal criteria.
  8. Complete the AIF subscription form and send money. This usually entails depositing the money into the funds bank account.
  9. Review fund manager statements and reports to track your AIF investment. Track the funds performance and investing plan changes.
  10. Learn about AIF exit possibilities. AIFs have lock-in periods and exit limitations, so expect liquidity issues.
  11. If you have questions regarding AIF investing, talk to a financial advisor or investment expert.
  12. Diversify your risk by investing in many asset classes.
  13. Monitor legislation, market conditions, and AIF investment performance. Review your investing plan often to ensure it meets your financial goals.
To invest in AIFs, its crucial to understand your financial situation, goals and the specifics of the AIF youre considering before investing.

Frequently Asked Questions

A. What are the primary advantages of investing in AIF funds over other investment options?

Alternative Investment Funds (AIFs) offer numerous advantages over traditional investments. AIF Funds use private equity, real estate, and hedge funds to spread their financial exposure across multiple markets. Their professional fund managers may have specific skills and deliver superior returns. AIFs provide more customizable investing strategies depending on investor preferences and risk tolerance. Furthermore, AIFs are often available to institutional and individual investors, expanding the pool of potential capital.

B. What are the typical returns one can expect from AIF investments?

AIF Investments manager strives to provide superior returns compared to relevant benchmark indexes. But the returns cannot be determined. The returns are based on the different categories of AIF funds. At the end of June last year, the AIF industrys assets were Rs 6.94 trillion, an increase of 22% yearly. From a starting point of Rs 1.8 trillion in assets, the sector has multiplied by 4.7 in the last five years.

C. What is the AIF minimum investment required to participate?

The AIF minimum investment requirement to participate depends on the three broad categories of AIF under SEBI regulations. The minimum investment in AIF funds is Rs. 1 crore but can vary depending on the specific fund and its regulations. Investors should check the funds offering documents or contact the fund manager for detailed information on the minimum investment requirement for a particular AIF.

D. What factors determine the minimum investment in AIF?

The minimum investment in AIF is influenced by various factors such as fund type, strategy, AIF category, market conditions, location, fund size, risk profile, lock-up period, and regulatory guidelines. AIFs with higher-risk strategies may require more significant investments to mitigate risk and attract investors. Additionally, SEBI regulations and market conditions can affect minimum investment requirements.

E. How do alternative investment funds AIF compare to traditional investment funds in terms of risk and returns?

When it comes to risks and returns, alternative investment funds AIF differ from traditional investment funds in several ways. Traditional investments offer more liquidity. Whereas AIF funds have longer lock-up periods, accessing them is difficult.

Alternative investments carry more risk but also have the potential for more significant rewards than conventional investments. For instance, investing in funds of funds or debt funds can have a larger risk of failure than traditional investments. But, still, the potential rewards of AIF funds are significant under expert guidance.

F. How do AIF alternative investment funds provide unique investment opportunities?

AIF Alternative Investment Funds diversify portfolios by focusing on unconventional assets like private equity, hedge funds, real estate, and start-ups. They offer lower correlation, higher returns, and flexible strategies, catering to conservative and aggressive investors. AIFs enhance portfolio resilience and financial goals.

G. What are the essential steps to consider before investing in AIFs?

Before investing in AIFs, Investing in Alternative Investment Funds (AIFs) requires thorough research and due diligence. Understand your investment objectives and risk tolerance, select an AIF aligned with your goals, evaluate the funds track record, manager expertise, and assets, and consult a financial advisor for suitable portfolio addition.