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, in the form of Equity and Venture Debt Funds to funds approved under Category I & II by SEBI from time to time, has been identified as another important tool for investment. 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, Agri Value Chain, Support for FPOs, Technology Support at Farm level etc.

Objectives

NABARD would be making contributions to Alternative Investment Funds (AIFs) having 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 agriculture and rural development including climate change adaptation and mitigation.
• To facilitate development of income-generating sustainable model units for emulation by rural people.
• To encourage investment in innovative, high-risk, sunrise enterprises supporting and promoting agriculture, rural development and climate action.
• To assist units which are unable to scale up their operations for want of access to equity, semi-equity and debt instrument support.
• To support units that would lead to infrastructure development and/or generate, directly or indirectly, employment in rural areas.

Eligibility

• The AIF should be registered under the 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 from the date of Final Closing;
• The start-up units/ existing units to be supported by the AIF may preferably be set up in rural areas as defined in NABARD Act, 1981. 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 its commitment should be invested in the enterprises catering to / working, directly or indirectly, for the benefit of 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 including equalization premium or any such premium on account of joining the Fund after previous closings.
• Investment Managers seeking commitments for its first or second SEBI registered Fund will be considered as New Fund. The additional terms applicable for such Funds are:

a) Should have mobilised commitment of not less than 25% of the proposed corpus, from contributors other than sponsors;
b) Atleast one Key Management Personnel from the promoters or the Fund Managing Team should have an experience of more than 5 years in managing activities of SEBI registered AIFs prior to current Fund and have good track record. Further Key Management Personnel should have at least 10 years’ experience in managing pools of capital or in buying, selling and dealing of securities or other financial assets.
c) Should have achieved first closing;
d) The ceiling for investment / commitment shall be as under:

• 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

Processing Fees:

A non-refundable processing fee of Rupees Two Lakh Fifty Thousand plus applicable taxes for proposals upto Rs 25 crore and Rupees Five Lakh plus applicable taxes for proposals above Rs 25 crore shall be payable by the AMC before the proposal is placed before the Screening Committee.