Setting up a Category II AIF: the end-to-end roadmap

Category II is the workhorse of Indian alternative funds: private equity, private credit, real-estate strategies. The registration process is well-trodden, but the early structural decisions carry consequences for the fund's whole life. Sequence matters.

Structure before speed

Most Cat II AIFs are settled as trusts, with a manager entity and a sponsor whose skin-in-the-game commitment is a regulatory floor, not a marketing number. Decide early: who sponsors, who manages, how carry flows, and what the manager's own economics look like. Re-papering these after investor conversations begin is possible, and painful.

The PPM is a product, not a formality

The private placement memorandum goes through a merchant banker and follows SEBI's template discipline. Investors read it, and so does the regulator, years later, when something is contested. Draft it as the document you want quoted back at you.

The registration file

• Trust deed, manager and sponsor constitution documents
• PPM in SEBI's template, via merchant banker
• Key personnel disclosures and track record
• Fit-and-proper confirmations across the chain

After the certificate

Registration is the start line. First close, investor onboarding, ongoing SEBI reporting, valuation policy, conflicts register. The funds that run smoothly decided their compliance calendar before the first rupee landed.