(ALTERNATIVE INVESTMENT FUNDS) REGULATIONS, 2012.

  • Recently, the Ministry of Finance has launched ‘Ubharte Sitaare’ Alternative Investment Fund to facilitate debt and equity funding to export-oriented MSMEs (Micro Small and medium Enterprises).
  • The fund is expected to identify Indian enterprises with potential advantages, but which are currently underperforming or unable to tap their latent potential to grow.

Alternative Investment Fund

  • Anything alternative to traditional forms of investments gets categorized as alternative investments.
  • In India, AIFs are defined in Regulation 2(1)(b) of Securities and Exchange Board of India (Alternative Investment Funds) Regulations, 2012.
  • It refers to any privately pooled investment fund, (whether from Indian or foreign sources), in the form of a trust or a company or a body corporate or a Limited Liability Partnership (LLP), which are not presently covered by any Regulation of SEBI governing fund management nor coming under the direct regulation of any other sectoral regulators in India.
  • Thus, the definition of AIFs includes venture Capital Fund, hedge funds, private equity funds, commodity funds, Debt Funds, infrastructure funds, etc.

Important points:

  • Under the scheme, an identified company is supported even if it is currently underperforming or may be unable to tap its latent potential to grow.
  • The scheme diagnoses such challenges and provides support through a mix of structured support covering equity, debt and technical assistance. It will also have a Greenshoe Option of Rs 250 crore.
  • A greenshoe option is an over-allotment option, which is a term that is commonly used to describe a special arrangement in a share offering for example an IPO (Initial Public Offering) that will enable the investment bank to support the share price after the offering without putting their own capital at risk.
  • The fund has been set up jointly by Exim Bank and SIDBI (Small Industries Development Bank of India) which will invest in the fund by way of equity and equity-like products in export-oriented units, in both manufacturing and services sectors.

Objectives:

  • To enhance India’s competitiveness in select sectors through finance and extensive handholding support.
  • Identify and nurture companies having differentiated technology, products or processes, and enhance their export business; assist units with export potential, which are unable to scale up their operations for want of finance.
  • Identify and mitigate challenges faced by successful companies which hinder their exports.
  • Assist existing exporters in widening their basket of products and target new markets through a strategic and structured export market development initiative.

SOURCE: THE HINDU,THE ECONOMIC TIMES,MINT

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