With resolution of Central Government for reforms, transparency and governance in Corporate Sector, sentiments in the Capital Market has turned positive. Companies Act 2013 has also helped in reinstating the confidence of small shareholders in Capital Market. As the capital market has grown global, it has generated ample need and huge opportunities for pools of ready money for investments in specific sectors. In such a scenario, several new Investor and Market friendly laws like AIF/ REITs and InvIT have been introduced. SEBI has also recently simplified some norms of AIFs. These type of funds will help in rapid development and growth of various sector of the country.

1. 11/20/14
ALTERNATIVE INVESTMENT FUND (AIF),
REAL ESTATE INVESTMENT TRUST (REITS)
&
INFRASTRUCTURE INVESTMENT TRUST (INVITS)
NEW KIDS ON THE HORIZON

2. Outline
Pooling vehicles – Existing & New
Major influencer(s) to new reforms
Alternative Investment Funds (AIF)
Why AIF?
AIF - Structure
Key features
Investment Conditions
Benefits
Real Estate Investment Trusts (REITs) & Infrastructure Investment trusts (InvITs)
Why REITs & InvITs?
REITs & InvITs - Structure
Key Features & Investment Conditions
REITs & InvITs: Distinguishing Factors
Benefits
Difference b/w AIF & REITs & InvITs
How these instruments may help you?
Conclusion
11/20/14

3. Elevated Investment horizon for Industry, Investors & Economy
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4. Existing Pooling Vehicles
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5. New Pooling Vehicles
1. Not a pool
2. Account of each
investor maintained
separately
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VCF
subsumed by
AIF
FII
subsumed by
FPI

6. Major Influencers to new reforms?
11/20/14

7. 11/20/14
Alternative Investment Fund (AIF)

8. Why Alternative Investment Funds?
11/20/14

9. Basic Structure of AIF
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Investors
AIF (Fund) (in Trust from)
(Fund Manager)
Trustee
SPV 1
SPV 2
SPV 3
SPV 4
Advisory
Services
Fee +
Carry
Investments Returns
Services
Fee
Investments Returns
Sponsor

10. AIF- Key Features & General Investment Conditions
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11. AIF - General Investment Conditions
11/20/14

12. Categories of Funds and Coverage thereunder
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13. Alternative Investment Funds (AIF) – CATEGORY - I
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14. Alternative Investment Funds (AIF) – CATEGORY – I – Angel Funds
Raising of funds only from “Angel Investors”
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15. Existing VCF AIF
SEBI VCF regulations are replaced by the SEBI AIF regulation which provides much wider horizon
in depicted below are the do and don’ts for existing VCFs:
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16. Alternative Investment Funds (AIF) – CATEGORY – II
The Category is most broad with minimum restrictions
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17. Alternative Investment Funds (AIF) – CATEGORY - III
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18. Basic Structure of AIF
11/20/14
Investors
AIF (Fund) (in Trust from)
(Fund Manager)
Trustee
SPV 1
SPV 2
SPV 3
SPV 4
Advisory
Services
Fee +
Carry
Investments Returns
Services
Fee
Investments Returns
Sponsor

19. AIF - Benefits
11/20/14

20. 11/20/14
Real Estate Investment Trust (REITs)
&
Infrastructure Investment Trust (InvITs)

21. Why REITs/InvITs?
11/20/14
The share of real estate sector in national GDP
is expected to increase from 6.3 per cent in
2013 to 13 per cent by 2028.
Regulated through SEBI (REITs) Regulation, 2014 and SEBI (INVITs) Regulations, 2014

22. REITs / InvITs – Understanding the Concept
11/20/14
In simplest terms:
REITS = Real Estate Mutual Funds
Investors
REITs
Returns
To Investor
Income Generating
Properties
(i.e. completed projects)
Rental Income distributed regularly
Sale proceeds of property (sold at end of tenure)
distributed to investors on liquidation
SPVs

23. REITs/ InvITs Structure
11/20/14
RREEIITTss
LLeennddeerr((ss))
PPrroommootteerr((ss))//SSppoonnssoorr((ss))
IInnvveessttoorr((ss))//UUnniitt HHoollddeerr((ss))
Investment
Manager(s)
Fees
AAsssseett MMaannaaggeerr((ss)) SSPPVV
TTrruusstteeee((ss))
Contribution
Contribution
Debt Returns
Return in form of
interest and
principal amount
Management
services
Delegation of
powers
Manages
assets
Asset
Management
Fee
Trustee
services
Fees
Investment
/Ownership Income
/Revenue
Investment
/Ownership
AAsssseettss//PPrrooppeerrttyy ((iieess))

24. Key features : REITs / InvITs
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25. Contd… Key features :REITs / InvITs
11/20/14

26. Analogous elements Contd… Key feature so f: RREEIITTss // IInnvvIITTss
11/20/14

27. Basic Distinguishing Factors between REITs / InvITs
PARTICULARS REITs INVITs
Min. Trading
lot size
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INR. 1 lakh • In case of initial Pvt . placement INR 1Cr.
• In case of IPO and follow on offer INR 5 lakh
Fund raising Only through Initial public offer or follow on
offer(s)
• Through pvt. placement if more 10% of asset value
invested in under construction project .
• In any other case through IPO or follow on offer(s)
Min.
acceptable
investment
INR 2 lakhs • In case of initial Pvt . placement INR 1Cr.
• In case of IPO and follow on offer INR 10 lakh
Min. number of
unit holder(s)
Not specified • In pvt placed InvITs – 5 each holding not more than
20% units
• In publically placed – 20 each holding not more than
25%
Max. number
of unit
holder(s)
No limit • In pvt placed InvITs – 1000
• In publically placed – No limit
Deployment of
Funds
In Real Estate (i.e. land and any permanently
attached improvements to it whether leasehold or
freehold and includes buildings, sheds, garages,
fences, fittings, fixtures, warehouses, car parks,
etc. and any other assets incidental to the
ownership of real estate but does not include
mortgage)
In Infrastructure (i.e. asset falling under the purview of
'infrastructure' as defined vide Notification of Ministry of
Finance dated October 07, 2013 and including any
amendments or additions made thereof)
Income
Generation
75% of the revenues to arise out of renting and
leasing of real estate assets.
• No such condition

28. REITs/ InvITs Structure
11/20/14
RREEIITTss
LLeennddeerr((ss))
PPrroommootteerr((ss))//SSppoonnssoorr((ss))
IInnvveessttoorr((ss))//UUnniitt HHoollddeerr((ss))
Investment
Manager(s)
Fees
AAsssseett MMaannaaggeerr((ss)) SSPPVV
TTrruusstteeee((ss))
Contribution
Contribution
Debt Returns
Return in form of
interest and
principal amount
Management
services
Delegation of
powers
Manages
assets
Asset
Management
Fee
Trustee
services
Fees
Investment
/Ownership Income
/Revenue
Investment
/Ownership
AAsssseettss//PPrrooppeerrttyy ((iieess))

29. REITs / InvITs – How different from Mutual Funds?
PARTICULARS MUTUAL FUND REITs/ InvITs
Investment Securities of listed entities Real estate properties or infrastructure
11/20/14
project
Stock Securities Income Generating Properties / Projects
Investment
Period
Continuous buy and sale of securities
in market
Investment for long term period of 10-15
years
Return to
investors
From buying and selling of securities in
listed market and appreciation of their
value
From rent of these properties
Sale proceeds at end of tenure
Exit largely open ended so can redeemed
anytime
close ended – on closure of scheme or can
be sold on stock exchange at quoted value

30. REITs/ InvITs – Benefits
11/20/14

31. Differentiation between AIF and REITs / InvITs
Basis AIF REIT/InvITs
Legal Structure Provides flexibility of registering the fund as
11/20/14
Trust, LLP or even a Company.
Can be set up only as a Trust & mandatorily to be
registered with SEBI.
Fund Size and
Asset base
AIF can start deployment with a minimum
fund Corpus of INR 20 Crores
There is no minimum corpus though REIT to have
minimum Assets (owned ) of INR 500 cr.
Fund Raising Only through Private Placement Only through IPO & FPO/ Right Issue /QIB
/ Minimum
Only HNI investment – Minimum investment
Investor
to be INR 1 Cr. (can be divided into two, i.e.
Contribution
close family members joint holding)
Retail investment allowed
Min. INR 2 lakhs (REITs)
Min. INR 10 lakhs (InvITs)
Listing Optional (for close ended funds) Since fund to be raised only through IPO,
mandatory listing
Deployment of
Fund
· Much Flexibility, in accordance to the
Scheme and/or Information
memorandum.
· Not more than 25% investment (of the
fund corpus) in one project.
· Not Direct investment in projects but in
securities of the project companies
either Debt, Equity or mezzanine.
· Minimum 80% of investment to be in
completed revenue generating properties.
· Only in commercial real estate assets/ infra
projects
· Investments either directly in properties or
through SPVs (no step down investment by
SPV in another SPV)
· Controlling interest in the SPVs

32. How these instruments may help you?
11/20/14

33. AIF - Statistics?
11/20/14

34. Conclusion
11/20/14

35. Thank You
Pavan Kumar Vijay
Corporate Professionals
D-28, South Extension –I, New Delhi-110 049
Ph: +91.11.40622200; Fax: +91.11.40622201; E: pkvijay@indiacp.com
11/20/14