"It's only in the last few months that things have started to pick up," said Sumit Agrawal, founder of law firm Regstreet Law Advisors and former Sebi official. Tax issues had also affected AIF registrations and launch of schemes in the recent past, he added.
Sentiments have changed now with a sharp turnaround in the market. Moreover, category II funds have seen momentum partly due to an increased interest in stressed assets, said Gandhi.
There are three categories of AIFs. The first includes venture capital that backs new, innovative companies and start-ups. It also includes funds investing in small and medium enterprises, social venture funds and infrastructure funds. The second category includes private equity funds, which may back large companies, as well as funds which invest in distressed assets. They do not use leverage, which means that they don’t bet more money than they have. Only the third category of funds is allowed to use leverage. This last category includes hedge funds.
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