Menu

Alternative Investment Funds

To give a fillip to sustainable and equitable growth in agriculture, agro processing, industry and services sectors in rural areas, making contribution to professionally managed SEBI registered Alternative Investment Funds (AIFs) under Categories I and II, having exposure to Agriculture and Rural sector, has been identified as yet another important tool. Such investments are covered under Section 26 of NABARD Act, 1981. 
 
The sectors broadly includes Food Processing, Animal Husbandry, Fisheries, Supply Chain Management, Farm Mechanisation, Biotechnology, Waste Management, Renewable energy, etc.
 
Objectives
 
NABARD would be making contributions to Alternative Investment Funds (AIFs) with one or more of the following objectives: 
 
  • To complement and broad base the existing Refinance and Co-finance products and other developmental initiatives of NABARD.
  • To encourage entrepreneurship in existing or new activities leading to agricultural and rural development.
  • To facilitate development of model units for emulation by rural people.
  • To encourage investment in innovative, high-risk, sunrise activities in agriculture and rural development sectors.
  • To assist units which are unable to scale up their operations for want of equity support.
  • To support units that would lead to infrastructure development and/or generate, directly or indirectly, employment in rural areas.
 
Eligibility
 
  • The AIF is registered under SEBI (Alternative Investment Fund) Regulations, 2012. Funds classified under Category I and II of the above regulations will be considered;
  • The Fund should have a maximum life period of 10 years;
  • The portfolio companies to be supported by the AIF may preferably be set up in rural areas as defined in NABARD Act, 1981 and if the units are set up outside such area, the goods and services produced by them should be benefiting the rural areas either directly or indirectly;
  • NABARD stipulates that two times (2x) the amount of commitment should be invested in the enterprises benefiting agriculture and rural development. In the event of non-fulfilment of stipulation, the IM shall be obligated to pay a penalty of 15% p.a., payable at half yearly rests, on the shortfall in meeting the stipulated investment (“2x norm);
  • All the previous Funds should have completed the commitment period.
  • The Investment Manager should exempt NABARD from payment of any additional            contribution (equalization premium, etc.) on account of joining the Fund after the initial closing.
  • The promoters of the Investment Manager (the company) should have experience in VCF/AIF business for at least 10 years and demonstrated good performance. 
  • Investment Managers seeking commitments for its first or second SEBI registered Fund will be considered as new Funds.  The additional terms applicable for such Funds  are: 
a. Should have mobilised commitment not less than 25% of the proposed corpus, from contributors other than sponsors (Sponsor commitment will include commitment from Investment Manager & Sponsor company/Group);
b. Should have achieved first closing;
c. The ceiling for investment / commitment shall be as under:
 

If the AMC is promoted by PSU or Corporate

Corporate (Holding company) having total assets of ` 1000 crore on the date of registration of Fund.

 

Not exceeding ` 10 crore

(First Fund)

Not exceeding `15 crore

(second Fund)

If the AMC is promoted by individual(s)/ group of individuals/ LLP/other corporate with total assets less than 1000 crore.

 

Not exceeding ` 5 crore

(First Fund)

Not exceeding `10 crore

(Second Fund)

  •  The structure of the AIF Trust (Trust) / Asset Management Company (AMC) of the Fund shall be in compliance with various regulatory and statutory requirements.  
 
The proposal should contain the following documents
 
  • Copy of SEBI Registration Certificate
  • Private Placement Memorandum
  • Past performance details - IRR generated by the Fund in case fully exited; in case of partial exits, the IRR of exists so far and valuation of unexited portfolios (certified by a Chartered Accountant)
  • Copy of commitment letters received from other investors
  • Details of investments made so far and deals in pipeline
 
A non-refundable processing fee of Rupees One lakh plus applicable taxes shall be payable by the AMC before the proposal is placed before the Screening Committee.