AIF Advisory / Registration
AIF Registration Case Study: From Fund Structure to SEBI Approval
SEBI AIF Registration
Category II AIF
Fund Structuring
PPM & Form A
Post-Registration Readiness
A first-time Indian fund-management team wanted to launch a ₹100 crore growth-equity and pre-IPO fund but had not previously operated a SEBI-regulated pooled vehicle. Elite Valuation helped structure the scheme as a Category II AIF set up as a trust, align the Sponsor and Investment Manager, prepare the PPM and Form A package, close two rounds of SEBI queries, and obtain the Form B registration certificate in Week 10. The engagement then moved directly into first-close readiness instead of ending at registration.
₹100 cr
10 weeks
2 rounds
15 days
01. A First-Time Manager Needed More Than a Form A Filing
The promoter group consisted of experienced investment professionals who had previously invested proprietary and family capital but had never operated a registered Alternative Investment Fund. Their proposed strategy focused on growth equity, late-stage private companies and pre-IPO opportunities in India.
The first scheme was planned with a ₹100 crore target corpus, a five-year investment horizon and a closed-ended structure. The team initially considered both Category II and Category III, but the proposed strategy did not require leverage or a hedge-fund style trading mandate. Category II therefore aligned better with the actual investment thesis.
A trust structure was selected for the AIF, with an independent Trustee, a separate Investment Manager LLP and the Sponsor/Manager maintaining the required continuing interest. The PPM also had to articulate investment strategy, concentration limits, governance, fees, carry, valuation, conflicts and risk factors in a form that could withstand both SEBI review and future LP diligence.
Elite Valuation was engaged as the registration and setup adviser across structuring, entity documentation coordination, PPM drafting, Form A preparation, Sponsor/Manager readiness, SEBI query management and post-registration operational setup.
"AIF registration is not won by filing more documents. It is won by making the structure, PPM, people, economics and operating model tell one consistent regulatory story."
02. Six Issues That Could Have Delayed Registration
The key risks sat at the interfaces between the investment thesis, legal structure, team credentials, Sponsor economics, PPM disclosures and operational readiness.
| Challenge Area | Description & Registration Impact |
|---|---|
|
Category Selection Regulatory Fit | The investment team initially wanted flexibility to invest across listed and unlisted opportunities. The mandate had to be drafted so that the actual strategy fit Category II rather than accidentally reading like a leveraged or trading-oriented Category III strategy. |
|
Trust / Manager / Sponsor Architecture Fund Structure | The trust deed, Investment Manager LLP agreement, Sponsor role and Trustee responsibilities had to align with one another. Inconsistent powers across documents would have created avoidable SEBI queries. |
|
Key Investment Team Eligibility People & Certification | The first-time manager had experienced professionals, but the application also needed to evidence the required professional qualification, relevant experience and prescribed NISM certification within the key investment team. |
|
Sponsor Continuing Interest Skin in the Game | The Sponsor/Manager's economic commitment had to be documented and demonstrably fundable. For the ₹100 crore scheme, the planned commitment was ₹2.50 crore, subject to being maintained at the applicable minimum through the scheme life. |
|
PPM Economics and Conflicts Investor Disclosure | Management fee, carried interest, hurdle, expenses, co-investments, related-party transactions, conflict-management and valuation policies required precise drafting. Ambiguous commercial terms can become both SEBI queries and future LP disputes. |
|
Operational Readiness Post-Registration Setup | Registration alone would not make the fund ready to accept capital. Custody, banking, audit, valuation, KYC/AML, investor onboarding, compliance ownership and reporting processes had to be prepared before the first close. |
03. From Fund Thesis to Form B Registration
The workstream was sequenced so that each regulatory document flowed from the same approved fund strategy instead of being drafted independently.
Phase A: Fix the strategy, category and legal vehicle
The investment thesis was mapped against the AIF categories. Because the scheme focused on growth equity and pre-IPO investing without a leverage-driven trading strategy, Category II was selected. A trust was chosen as the fund vehicle, with a separate Investment Manager LLP and independent Trustee.
Phase B: Establish Sponsor and Manager readiness
The Sponsor/Manager shareholding, governance, financial capability, fit-and-proper documentation and key-investment-team credentials were assembled. The continuing-interest plan was set at ₹2.50 crore for the ₹100 crore scheme, subject to the applicable corpus-linked requirement.
Phase C: Draft the PPM around the actual fund economics
The PPM documented the investment objective, target portfolio, tenure, risk factors, governance, management fee, carried interest, distribution waterfall, conflicts, valuation framework, defaulting-investor provisions and key-person mechanics. The commercial term sheet and PPM were reconciled line by line.
Phase D: Prepare and file the Form A application
The complete application was assembled for online filing through the SEBI Intermediary Portal, including constitutional documents, Sponsor/Manager information, key-person credentials, declarations, undertakings and the supporting PPM package.
Phase E: Close two SEBI query cycles
The principal queries related to the clarity of the investment strategy, Sponsor/Manager capability, key personnel credentials, conflicts and co-investment disclosure, valuation governance and specific PPM language. Both query rounds were answered through coordinated amendments rather than piecemeal responses.
Phase F: Obtain Form B and move directly to first-close readiness
The AIF registration certificate was obtained in Week 10. Within the next 15 days, the operating pack was completed for investor onboarding, KYC/AML, banking, custody, valuation, audit, compliance calendar and first-close documentation so the manager could begin fundraising with an operationally ready vehicle.
6 AIF registration components applied:
Registration workstream and outcome:
| Workstream | Case Position | Outcome |
|---|---|---|
| Fund Category | Growth equity + pre-IPO strategy | Category II AIF |
| Legal Structure | First-time manager | Trust + Investment Manager LLP + independent Trustee |
| Target Corpus | ₹100 crore | Closed-ended first scheme |
| Sponsor/Manager Interest | Corpus-linked minimum | ₹2.50 crore planned continuing interest |
| SEBI Review | Strategy, people, conflicts, PPM and governance queries | 2 query rounds closed |
| Registration | Complete Form A filing | Form B received in Week 10 |
Post-registration readiness checklist:
| Area | Setup Completed |
|---|---|
| Investor Onboarding | KYC/AML, contribution agreement and application workflow |
| Banking & Custody | Scheme bank account and custodian operating process |
| Valuation | Valuation policy, independent valuer workflow and NAV calendar |
| Audit & PPM Compliance | Auditor appointment and annual PPM audit calendar |
| Governance | Investment Committee / Manager approval and conflict-management processes |
| Regulatory Calendar | SEBI reporting, KYC/AML, investor reporting and other periodic compliance ownership |
SEBI AIF registration framework applied
SEBI (Alternative Investment Funds) Regulations, 2012: the registration exercise addressed the applicable eligibility criteria, AIF category, Sponsor/Manager requirements, investment-team capability, scheme economics and ongoing obligations relevant to a Category II AIF.
Online Form A filing: the current SEBI AIF Master Circular requires AIF registration applications to be submitted online through the SEBI Intermediary Portal, together with the required supporting documents and declarations.
Key investment team: the Manager's key investment team must satisfy the applicable experience/professional-qualification framework and include the prescribed NISM-certified key personnel.
Continuing interest: for Category I and II AIFs, the Sponsor or Manager is required to maintain the prescribed continuing interest in the scheme. The case therefore incorporated the continuing-interest funding plan into the structure before registration.
Registration is not first close: obtaining Form B is the regulatory approval milestone; investor onboarding, KYC/AML, service-provider setup, bank/custody processes, valuation policy and reporting readiness are separate operational steps required before the fund can run smoothly.
04. Result: Registration Completed and the Fund Was Ready to Raise
The engagement closed the regulatory approval process and the operational gap that often remains between receiving the certificate and being genuinely ready for the first investor close.
₹100 cr
10 weeks
2 rounds
15 days
- The first-time manager entered the market with a ₹100 crore Category II scheme whose category, structure and investment strategy were aligned before investor marketing began.
- The Sponsor/Manager continuing-interest plan of ₹2.50 crore was embedded into the application and funding plan rather than being treated as a post-registration financing issue.
- Two SEBI query rounds covering strategy, governance, conflicts and key-person matters were closed without changing the core investment thesis of the scheme.
- The Form B registration certificate was received in Week 10, allowing the team to move from regulatory application mode into fund launch and investor onboarding.
- Within 15 days after registration, the fund had its KYC/AML, banking, custodian, valuation, audit and compliance workflows ready for the first close instead of building them after capital arrived.
05. Five Lessons from a First-Time AIF Registration
The strongest applications reduce SEBI query risk by resolving structural and operational questions before Form A is submitted.
Select the AIF category from the actual investment strategy
The team initially wanted broad flexibility, but the fund was fundamentally a growth-equity and pre-IPO strategy without leverage-led trading. Category II was therefore the cleaner regulatory fit.
The PPM should be the operating blueprint, not a registration brochure
The PPM had to describe fees, carry, conflicts, valuation, governance and investment limits in enough detail that the same document could guide the fund after registration and withstand LP diligence.
Key-person readiness should be checked before filing
Experience alone was not enough. The required qualification and certification framework had to be mapped to named key personnel before the application went to SEBI.
Plan Sponsor continuing interest as a real funding obligation
The ₹2.50 crore continuing-interest plan was treated as capital that had to remain available for the scheme, not merely as a disclosure inserted into the PPM.
Do not confuse registration with operational readiness
Form B was received in Week 10, but the fund still needed investor onboarding, KYC/AML, custody, valuation, audit and reporting processes. Completing these within 15 days protected the planned first-close timetable.
Why Choose Elite Valuation
Elite Valuation supports first-time and established fund managers across AIF structuring, PPM drafting, SEBI registration, query management, post-registration compliance and portfolio Valuation.
For registration assignments, the firm coordinates the investment strategy, regulatory category, fund vehicle, Sponsor/Manager readiness, key-person documentation, PPM, Form A and post-registration operating framework so that the application is built as one integrated project.
As an IBBI Registered Valuer with CA and CS capability, Elite Valuation can continue supporting the AIF after registration through independent portfolio Valuation, NAV support and related fund-governance requirements.
IBBI Registered Valuer
CA & CS Led Advisory
AIF Registration
SEBI Compliance
AIF Structuring
PPM Drafting
Form A & SEBI Queries
Post-Registration Compliance
AIF Portfolio Valuation
Sagar Shah — CA | CS | IBBI Registered Valuer | Founder, Elite Valuation
Sagar Shah is the founder of Elite Valuation and a qualified Chartered Accountant, Company Secretary, and IBBI Registered Valuer with prior experience at Ernst & Young. He specialises in business Valuation, M&A advisory, ESOP Valuation, FEMA compliance, and regulatory Valuation across the Companies Act, SEBI, and RBI frameworks. Elite Valuation operates pan-India from Ahmedabad, advising companies of all stages and sizes.
