Corpus
Also written Fund Corpus · Scheme Corpus · AIF Corpus
The total of all capital commitments raised by a Category III AIF scheme from its investors — not the cash actually collected, which SEBI requires to be at least Rs 20 crore.
In plain language
When a Category III AIF talks about its "corpus", it does not mean cash sitting in a bank account. It means the total amount investors have promised to the scheme — the sum of every capital commitment signed.
An investor who commits Rs 5 crore to a fund has not handed over Rs 5 crore. They have signed up to pay it when the manager asks, through a drawdown. Until then, that Rs 5 crore is part of the corpus but has not become invested capital.
This distinction — promised versus paid — runs through the whole chapter on Category III AIF concepts, and it is the first thing a distributor has to get straight before any of the fee or return calculations make sense.
How it works
SEBI sets a floor, not a ceiling. Under the SEBI (Alternative Investment Funds) Regulations, 2012, every scheme of a Category III AIF must have a total corpus of not less than Rs 20 crore — the aggregate of capital commitments raised from investors. This appears repeatedly in the workbook's comparison tables (against PMS, mutual funds and Specialized Investment Funds), each time stated as the same figure: "Category III AIF corpus to be minimum Rs 20 crore."
The corpus does not move as money is drawn down. If a scheme closes with Rs 85 crore of commitments, its corpus stays Rs 85 crore whether Rs 10 crore or Rs 80 crore has actually been called from investors — drawdowns change invested capital and dry powder, not the corpus itself.
The corpus is also the base against which two other numbers are measured: the manager or sponsor's continuing interest (not less than 5% of the corpus or Rs 10 crore, whichever is lower) and, in Category I and II funds discussed elsewhere in the family of papers, the sponsor commitment threshold.
A worked example
Meridian Quant Fund, a Category III AIF, closes its private placement with 42 investors committing a total of Rs 85 crore — comfortably above the Rs 20 crore floor. That Rs 85 crore is the scheme's corpus.
Over the next eight months, the manager issues drawdown notices totalling Rs 55 crore, which investors pay in. At this point:
- Corpus = Rs 85 crore (unchanged — it is what was committed, not what has been called)
- Invested capital = Rs 55 crore (what has actually been drawn down)
- Dry powder = Rs 30 crore (Rs 85 crore − Rs 55 crore, still uncalled)
The manager's continuing interest is computed on the corpus: 5% of Rs 85 crore is Rs 4.25 crore, which is less than the Rs 10 crore alternative, so Rs 4.25 crore is the amount the manager or sponsor must keep invested in the fund, in cash, not through a fee waiver.
Had the fund raised only Rs 18 crore of commitments, it would have failed to clear the Rs 20 crore floor and could not have declared its first close at that size.
Why NISM asks about it
Chapter 3 (Introduction to Category III AIF Ecosystem), sections 3.3.2 and 3.3.3, introduces corpus alongside capital commitment, sponsor commitment and drawdown — and the comparison tables in section 3.5 (Category III AIF versus PMS, Mutual Funds and SIF) repeat the Rs 20 crore minimum corpus figure three times over, which is exactly why it is a reliable recall question. Expect it tested against the Rs 1 crore minimum ticket size and the 5%-or-Rs 10 crore continuing interest figure, both of which are computed off the same corpus.
Common exam traps
- Corpus is committed capital, not drawn-down capital. A scheme can have an Rs 85 crore corpus while its invested capital is far smaller.
- The Rs 20 crore floor applies per scheme, not per fund house — a manager running three schemes needs each one to clear it independently.
- Corpus is not the same base as "AUM for Benchmarking", which SEBI's benchmarking circulars define as the value of total capital drawn down under the scheme — a different, smaller number once a fund is still raising or deploying capital.
- The manager's continuing interest is computed on the corpus, not on invested capital — so it is fixed at the point commitments are locked in, even before most of the money has been called.
Check yourself
1.A Category III AIF wishes to invest part of its corpus in units of a SEBI-registered Category II AIF. Which statement is correct?
- a)It must first re-register with SEBI as a Fund of AIFs
- b)It may invest only in units of other Category III AIFs
- c)It may invest directly in an investee company or through units of SEBI-registered Category I and Category II AIFs, without labelling itself a Fund of AIFs
- d)It may do so only with prior approval of SEBI for each such investment
Show the answer
Answer: (c) It may invest directly in an investee company or through units of SEBI-registered Category I and Category II AIFs, without labelling itself a Fund of AIFs
The workbook states that "Category III AIFs can directly invest into an investee company or invest through units of other Category I AIFs and Category II AIFs, registered with SEBI, without labelling themselves as a Fund of AIFs". So (c) is right. Option (a) is wrong because no Fund-of-AIFs label or re-registration is needed. Option (b) is wrong because Category I and Category II units are expressly allowed. Option (d) invents an approval step that the workbook does not mention. The fund is still bound by the investment restrictions in the SEBI (AIF) Regulations.
2.A Category III AIF shall not accept from an ordinary investor a capital commitment of value less than:
- a)Rs 25 lakh
- b)Rs 50 lakh
- c)Rs 1 crore
- d)Rs 20 crore
Show the answer
Answer: (c) Rs 1 crore
The minimum capital commitment from an investor in a Category III AIF is Rs 1 crore, and this minimum does not apply to Accredited Investors. Rs 25 lakh is the reduced minimum for employees or directors of the AIF or of the Manager. Rs 50 lakh is the PMS minimum. Rs 20 crore is the minimum corpus for the scheme, not the minimum from a single investor.
3.A Category III AIF scheme has total capital commitments of Rs 1,000 crore and has drawn down Rs 650 crore. The undrawn amount of Rs 350 crore is known as:
- a)Invested capital
- b)Dry powder
- c)Corpus
- d)Reserve capital
Show the answer
Answer: (b) Dry powder
The undrawn amount is dry powder. Invested capital is the Rs 650 crore actually drawn down by the manager for making investments, as against committed capital of Rs 1,000 crore. Corpus is the total of capital commitments raised — the Rs 1,000 crore figure itself.
Where this is taught
- Series XIX-B · Chapter 3: Introduction to Category III AIF Ecosystemintroduced here
- Series XIX-A · Chapter 3: Concepts in Alternative Investment Funds Industryintroduced here
- Series XIX-C · Chapter 7: Alternative Investment Funds Ecosystemintroduced here
- Series XIX-E · Chapter 5: Alternative Investment Fund Ecosystemintroduced here
- Series XIX-D · Chapter 4: Alternative Investment Funds Ecosystemintroduced here
Related terms
- Category III AIFThe AIF category for funds running diverse or complex trading strategies with leverage — hedge funds and their kin — and the only category denied tax pass-through status.
- Capital CommitmentThe total amount an investor promises to contribute to a Category III AIF over the life of the fund — at least Rs 1 crore, or Rs 25 lakh for employees and directors of the AIF or its Manager.
- DrawdownThe process by which the manager of a Category III AIF calls committed capital from investors as the fund needs it — also known as a capital call.
- Dry PowderThe part of a Category III AIF's capital commitments that investors have promised but the manager has not yet called — committed capital still waiting on the sidelines.
- Invested CapitalThe total amount a Category III AIF's manager has actually drawn down from investors to make investments, as against the larger capital they committed. The undrawn balance is dry powder.
- Final CloseThe date that ends fund-raising for a Category III AIF scheme — after it, a close-ended scheme accepts no new investors, and only then may its units be listed.
- Gross Net Asset ValueThe value of a Category III AIF's assets before incentive fees are deducted — and the base on which management fees are charged, which is why it is not the same as the NAV investors see.
- Portfolio Management ServicesA tailored investment service where the client owns the securities directly in their own name, regulated under the SEBI (Portfolio Managers) Regulations, with a minimum investment of Rs 50 lakh.
- Private placement memorandumThe offer document of a Category III AIF, filed with SEBI through a merchant banker at least 30 days before a scheme launches — and the document SEBI comments on but never approves.
- Over-commitment StrategyA deliberate cash-management approach where an institutional investor commits to more Category III AIFs than its current cash could cover if every capital call landed at once.
- General PartnerThe foreign-terminology name for the entity that manages a Category III AIF's investments — the Indian equivalent is the investment manager, and the fund's investors correspondingly become "Limited Partners" (LPs).
- Corporate Debt Market Development FundA close-ended Category I AIF, formed as a trust with a 15-year tenure, that buys investment-grade corporate bonds from debt mutual fund schemes when SEBI declares a market dislocation.