How to invest in an AIF — the process, end to end

Before anything else

This site does not distribute funds, does not onboard investors, and receives no commission from anyone. It publishes information about SEBI's public register. Nothing here is a recommendation to invest in any fund, and the page below describes a process rather than urging you through it.

If you are still working out whether an AIF is the right vehicle at all, start with AIF vs PMS and AIF vs mutual fund.

Step 1 — Check you clear the floor

The minimum investment is ₹1 crore, under Regulation 10(c). It cannot be waived by the fund or negotiated down.

Narrow exceptions exist: ₹25 lakh for employees and directors of the AIF and of its manager, and ₹25 lakh for an angel investor in an angel fund. A large value fund runs the other way and requires ₹25 crore per investor, all of whom must be accredited. The detail is at AIF minimum investment.

The ₹1 crore may be met jointly, but only with a spouse, parent or child, and only two people deep.

Check the commitment, not the cheque. What matters is whether you can meet the whole ₹1 crore over the drawdown period, not whether you have it today.

Step 2 — Find funds, and verify them yourself

There is no public marketplace for AIFs, because a private placement may not be advertised to the public. In practice funds reach investors through wealth managers, distributors, private banks and direct relationships.

Whatever route a fund reaches you by, check it against SEBI's register before anything else. Every SEBI-registered AIF is in the directory with its registration number, category, registration date and manager. You can also browse by Category I, Category II, Category III or by year of registration.

If the fund is not in the register under the name it is being sold to you under, resolve that before going further.

Registration is not an endorsement. It confirms the fund exists and is registered, nothing more — see AIF registration.

Step 3 — Get the private placement memorandum, and read it

The PPM is the document. It sets out strategy, terms, fees, risks, conflicts, valuation policy and tax treatment. SEBI prescribes a template for most funds and requires filing through a merchant banker.

It is not public, so you receive it rather than look it up. The sections that repay the most attention are the ones people skip: conflicts of interest and related-party transactions, valuation policy and who performs it, key person provisions, the tax section, and the default provisions on drawdowns.

A summary deck is not the PPM. Ask for the PPM.

Step 4 — Ask for the direct plan explicitly

SEBI has made direct plans mandatory for AIFs. A direct plan carries no distributor commission, and it is therefore cheaper than the intermediated version of the same scheme.

It will not always be offered to you by default. Ask.

Since 1 May 2023 the rules on how distributors may be paid changed materially: Category III AIFs moved to all-trail commission with no upfront payment, and Category I and II may pay upfront only up to one-third of the total distribution fee, with the remainder on equal trail across the fund's tenure. Distributors must disclose the commission to you at onboarding. The detail is at AIF distributor commission.

If a distributor is reluctant to tell you what they are being paid, that is information.

Step 5 — KYC and eligibility documentation

Standard capital-markets KYC applies: identity, address, PAN, bank details, source of funds, and FATCA and CRS declarations. Non-resident investors have additional requirements depending on residency and the route used.

If the fund is an Accredited Investors Only AIF or a large value fund, you will also need accreditation from a SEBI-empanelled agency, which is assessed against documentary proof and is not self-declared. See accredited investor in India.

Step 6 — The contribution agreement

You sign a contribution agreement committing a fixed amount to the fund. This is the moment the commitment becomes legal, and it is generally not revisable downwards afterwards.

Read the terms on: tenure and extension, the drawdown schedule and notice period, default provisions if you miss a call, transfer restrictions and whether the manager's consent is required, and the fee schedule in full — management fee and on what base, carry, hurdle, catch-up, expenses and any cap.

Step 7 — Drawdowns, over years

You are then called on to fund your commitment in instalments as the manager deploys capital. Calls arrive on notice, at times you do not control, over the investment period.

Two things follow that catch people out:

1. You must keep the uncalled portion available. A commitment is an ongoing obligation, not a completed purchase.
2. Missing a call has consequences, which in private funds can extend to forfeiture of part of what you have already contributed. Read that clause before signing rather than after.

Step 8 — What you receive afterwards

Reports to investors, a statement of pass-through income where the fund is Category I or II, and distributions as the fund realises investments.

What you will not receive is a publicly comparable performance figure. AIFs publish no NAV and no return publicly, so you cannot check your fund against another one, and neither can anyone else — see why AIF returns are not comparable.

The questions worth asking before you sign

The full diligence framework is at how to choose an AIF. The short version:

1. Is the fund registered, in which category, under exactly which name?
2. Am I being offered the direct plan, and what is the distributor paid?
3. Management fee on committed or invested capital?
4. Hurdle, catch-up and carry, as numbers?
5. What is the tenure, and on what terms can it extend?
6. What happens if I miss a drawdown call?
7. Who values the unlisted holdings, and are they independent?
8. What related-party transactions does the PPM permit?

Information only. Not investment advice, not an offer, and not a recommendation.

Checked against source on 24 August 2026. This page is information, not legal, tax or investment advice.

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