“SWAMIH Fund” Completes First Residential Project

What is the News?

The government of India’s SWAMIH (Special Window for Affordable & Mid-Income Housing) Fund has completed its first residential project in Mumbai.

About SWAMIH Fund:

• Firstly, SWAMIH Fund is a government-backed investment fund set up in the year 2019.
• Secondly, Purpose: The formation of fund happened to provide relief to developers that require funding to complete a set of unfinished projects. Consequently, it will also ensure the delivery of homes to the home-buyers.
• Thirdly, Type: The fund has been set up as a Category-II AIF (Alternate Investment Fund) debt fund registered with SEBI.
• Fourthly, Investment manager: The Investment Manager of the Fund is SBICAP Ventures, a wholly-owned subsidiary of SBI Capital Markets. This in turn is a wholly-owned subsidiary of the State Bank of India.
• Fifthly, Sponsor: The Sponsor of the Fund is the Secretary, Department of Economic Affairs, Ministry of Finance, on behalf of the Government of India.
• Sixthly, Criteria for Funding of Projects: The funding will be for the projects that meet the following criteria:
  • Stalled for lack of adequate funds
  • Affordable and Middle-Income Category
  • Net worth positive projects (including NPAs and projects undergoing NCLT proceedings)
  • RERA registered
  • Priority for projects very close to completion.

What is an Alternative Investment Fund(AIF)?

• Alternate investment funds(AIFs) are defined under the 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) established or incorporated in India for investing it in accordance with a defined investment policy.
  • An alternative investment is a financial asset that does not fall into one of the conventional equity/income/cash categories.
  • For example, private equity or venture capital, hedge funds, commodities, and tangible assets
• AIF does not include funds covered under the SEBI (Mutual Funds) Regulations, 1996, SEBI (Collective Investment Schemes) Regulations, 1999 or any other regulations of the Board to regulate fund management activities.

Categories of AIF:

 Category I:

• Under this, there is investment of funds mainly in start-ups, SMEs or any other sector which Govt. considers economically and socially viable.
• Examples include venture capital funds, social venture funds, infrastructure funds and other Alternative Investment Funds as may be specified.

Category II:

• Under this category, there is investment of funds in equity securities and inclusion of debt securities.
• These funds do not fall in Category I and III. They also do not undertake leverage or borrowing other than to meet day-to-day operational requirements.
• Examples include real estate funds, private equity funds (PE funds), and funds for distressed assets.

Category III:

• Under this category, there is investment of funds with a view to make short term return. The companies employ diverse or complex trading strategies and may also employ leverage including through investment in listed or unlisted derivatives.
• Examples include hedge funds, PIPE Funds.

Source: PIB