NISM Series XIX-A key terms

A privately pooled investment vehicle incorporated or established in India that collects funds from investors to invest under a defined strategy, registered with SEBI and governed by the AIF Regulations, 2012.

The regulatory framework issued by SEBI that defines AIF categories, registration requirements, investment conditions, governance norms, and compliance obligations applicable to funds, managers, and distributors.

AIFs that invest in start-ups, early-stage ventures, SMEs, infrastructure, or other sectors the government or regulator considers socially or economically desirable, with specified investment conditions and concessions.

AIFs that do not fall under Category I or III and do not use leverage other than for operational needs; typically include private equity funds and debt funds investing in unlisted securities.

A Category I AIF that primarily invests in unlisted securities of start-ups, early-stage companies, or ventures with high growth potential, subject to SEBI-prescribed investment conditions.

A sub-category of Venture Capital Fund registered under Category I that pools capital from angel investors to fund start-ups and early-stage ventures, subject to specified investment limits and conditions.

A Category I AIF that invests primarily in infrastructure projects or infrastructure-related companies, often under government-specified conditions and with long lock-in periods.

A Category I AIF that invests in small and medium enterprises as defined under applicable law, aiming to provide growth capital while meeting SEBI's sectoral investment conditions.

A Category I AIF that invests in ventures, entities, or projects generating measurable social or environmental benefits alongside financial returns, often with government or multilateral participation.

A Category II AIF that invests in unlisted equity or equity-linked securities of companies, typically with a medium-to-long horizon and active involvement in management or governance.

A Category II AIF that primarily invests in debt and debt-linked instruments of unlisted companies, subject to SEBI conditions on leverage, concentration, and eligible instruments.

The entity responsible for managing an AIF's investments, operations, and compliance, including making investment decisions and ensuring adherence to the fund's stated strategy and SEBI regulations.

The person or entity that establishes an AIF, provides seed capital, and may have a continuing role in governance or economic participation, subject to SEBI-prescribed conditions.

A governance body within an AIF's management structure that reviews and approves investment decisions, monitors portfolio performance, and ensures alignment with the fund's investment policy.

A written document describing an AIF's investment strategy, target sectors, asset allocation, risk limits, and valuation approach, which must be consistent with its registration category.

The disclosure document used to raise capital from investors in an AIF, setting out strategy, risks, fees, governance, conflicts of interest, and other material terms of the offering.

An investor meeting SEBI-prescribed eligibility criteria, including minimum ticket size and net-worth or income thresholds, permitted to invest in AIFs and other privately placed securities.

The smallest investment amount an eligible investor may commit to an AIF, currently set at INR one crore under SEBI norms, with a lower threshold for certain accredited categories.

The total amount an investor agrees to contribute to an AIF over its life, which is drawn down in tranches rather than paid upfront in a drawdown-style fund.

An AIF structure in which investors commit capital upfront and the manager calls it in tranches as investments are identified, typically used by private equity and venture funds.

A formal notice from an AIF's manager requiring investors to fund a portion of their committed capital, usually within a specified period and for a stated investment or expense.

An investor who fails to meet a capital call or other contribution obligation, triggering remedies such as forfeiture of commitment, dilution, or loss of rights under the fund documents.

A supplemental agreement between an AIF manager and a specific investor granting customized rights such as fee discounts, reporting, or co-investment access, subject to SEBI conditions.

A provision ensuring that an investor receives terms at least as favourable as those granted to other investors in the same fund, often implemented through side letters.

An arrangement where an AIF investor invests directly alongside the fund in a portfolio company, typically on terms set out in the fund documents or side letters.

An entity in which an AIF has invested, forming part of the fund's portfolio and subject to monitoring, valuation, and eventual exit by the fund manager.

The process by which an AIF realises its investment in a portfolio company, such as through an IPO, secondary sale, strategic sale, or buyback.

The process of determining the fair value of an AIF's portfolio investments, required periodically under SEBI norms and typically carried out by an independent valuer.

The value of an AIF's assets minus its liabilities, divided by the number of units, used for reporting, subscription, and redemption calculations where applicable.

A standard measure of an investor's interest in an AIF, representing a proportionate share of the fund's assets and entitlements to distributions and returns.

A periodic fee charged by an AIF manager, usually calculated as a percentage of committed or invested capital, to cover operating and management costs.

A fee paid to an AIF manager based on realised or accrued profits, typically calculated as a share of returns above a hurdle rate and subject to clawback provisions.

The minimum return an AIF must achieve before the manager becomes entitled to a performance fee, often expressed as a preferred return to investors.

The contractual order in which an AIF's cash flows are distributed among investors and the manager, covering return of capital, preferred returns, and performance fees.

A provision requiring an AIF manager to return previously received performance fees if later results show the manager was overcompensated relative to the agreed profit-sharing arrangement.

The use of borrowed funds or derivative exposure to increase an AIF's investment capacity, restricted for Category I and II funds except for operational requirements.

A minimum period during which investors in an AIF cannot redeem or transfer their units, helping the fund maintain stable capital for its investment strategy.

The process by which an investor's units in an AIF are repurchased or cancelled, subject to the fund's terms, lock-in conditions, and SEBI-prescribed restrictions.

An institutional investor category recognised under Indian securities law, eligible to participate in specified offerings and subject to distinct investment and disclosure requirements.

An investment approach seeking measurable positive social or environmental outcomes alongside financial returns, often aligned with Social Impact Funds under Category I.

An early-stage entity meeting government-defined criteria such as age, turnover, and innovative business model, eligible for investment by Venture Capital Funds and Angel Funds.

Initial capital contributed by a sponsor or founding investors to establish an AIF and cover setup costs before external investors commit funds.