Investable Funds
The corpus of an AIF scheme net of the administration and management expenditure estimated for the fund's tenure — the base on which Social Impact Fund investment limits are measured.
In plain language
When a fund raises money, not all of it can be invested. Some will be spent over the fund's life on running the fund — administration, management fees and similar costs.
Investable funds strips that out. The workbook defines it as the corpus of the scheme of an Alternative Investment Fund net of expenditure for administration and management of the fund estimated for the tenure of the fund.
It matters because SEBI states investment limits as a percentage of investable funds, not of the corpus. For XXIII this is the base for the Social Impact Fund rules on how much may go into the securities of NPOs registered or listed on a Social Stock Exchange.
How it works
The formula:
| Corpus of the AIF scheme | A |
| less: administration and management expenditure estimated for the tenure of the fund | B |
| Investable funds | A − B |
Social Impact Fund limits that use it (Chapter 2):
| Situation | Limit, as a share of investable funds |
|---|---|
| Existing Social Impact Fund investing in securities of NPOs registered or listed on an SSE | 25% |
| Social Impact Fund, or scheme, launched exclusively for registered or listed NPOs | 100% |
| Social Impact Fund investing in unlisted securities or partnership interest of social ventures, units of social ventures, or securities of social enterprises | 75% |
| The remaining investable funds, in securities of NPOs | Only with prior consent of at least 75% of investors by value of their investment |
A social venture, per the same chapter's footnote, is a trust, society, company, venture capital undertaking or LLP formed to promote social welfare, solve social problems or provide social benefits.
Grants. These funds may accept grants, which must be used only in the manner above. Units of a Social Impact Fund can be listed, but where the fund is 100% grant-in, grant-out their trading potential is limited.
A worked example
Illustrative figures.
Ujjwal Social Impact Fund, an AIF, closes a scheme with a corpus of ₹150 crore and a 7-year tenure. Its placement memorandum estimates administration and management expenditure over those 7 years at ₹12 crore.
Step 1 — investable funds. ₹150 crore − ₹12 crore = ₹138 crore
Step 2 — the limits.
| Bucket | Calculation | ₹ crore |
|---|---|---|
| Unlisted securities / partnership interest of social ventures, or securities of social enterprises | 75% × 138 | 103.5 |
| Remainder, which may go to NPO securities with consent of ≥75% of investors by value | 25% × 138 | 34.5 |
Step 3 — the NPO route. As an existing fund, Ujjwal may put up to ₹34.5 crore into ZCZP instruments and other securities of NPOs registered or listed on NSE SSE or BSE SSE. Investors accounting for at least 75% of the money invested by value — ₹112.5 crore of the ₹150 crore raised — would need to consent, if the Section 2.3.2 condition applies.
The error the question is built on. 25% of the corpus is ₹37.5 crore. That is ₹3 crore too high, because it ignores the estimated expenses.
A dedicated NPO fund. Had Ujjwal launched this scheme exclusively for registered or listed NPOs, it could invest 100% of ₹138 crore in their securities.
Why NISM asks about it
Chapter 2 defines investable funds in a footnote to section 2.3.1.3 and applies it in the Social Impact Fund investment rules there and in 2.3.2. It is the base for the paper's most calculable SIF question: apply 25%, 75% or 100% to a corpus net of estimated expenses. Examiners set the corpus-versus-investable-funds trap deliberately.
Common exam traps
- Limits apply to investable funds, not corpus. Always deduct the estimated administration and management expenditure first.
- The deduction is estimated for the whole tenure of the fund, not one year's expenses.
- 25% for an existing SIF; 100% for one launched exclusively for registered or listed NPOs.
- 75% into social ventures and social enterprises; the rest into NPO securities with consent of at least 75% of investors by value. Two different 75%s in one sentence.
- Workbook inconsistency. Section 2.3.1.3 states the 25% limit for an existing Social Impact Fund with no investor-consent condition. Section 2.3.2 describes the same remainder as investable "with prior consent of at least 75% of the investors by value". Quote whichever passage the question paraphrases.
- "Investable funds" is an AIF term. It is not the NPO's own programme budget.
Where this is taught
- Series XIX-B · Chapter 5: Regulatory Frameworkintroduced here
- Series XXIII · Chapter 2: Social Stock Exchange: Introduction, Funding Structures and Instrumentsintroduced here
- Series XIX-A · Chapter 4: Regulatory Framework - Indian Contextintroduced here
- Series XIX-C · Chapter 17: Regulatory Frameworkintroduced here
- Series XIX-E · Chapter 15: Regulatory Frameworkintroduced here
- Series XIX-D · Chapter 14: Regulatory Frameworkintroduced here
Related terms
- Alternative Investment FundA privately pooled investment vehicle registered with SEBI that raises money from select Indian or foreign investors under a defined investment policy — never from the public at large.
- Social Impact FundA Category I AIF investing primarily in social ventures and social enterprises, which satisfies the social performance norms laid down by the fund and may both take and give grants.
- Not for Profit OrganisationA social enterprise that is a charitable trust, charitable society or Section 8 company (or other entity SEBI specifies); it can register on an SSE and raise money mainly through ZCZP instruments.
- Zero Coupon Zero Principal (ZCZP) instrumentA listed security issued only by an NPO registered on an SSE for a specific project; it pays no interest and returns no principal, promising the funder a social return instead.
- Social VentureA trust, society, company, venture capital undertaking or LLP formed to promote social welfare, solve social problems or provide social benefits — the class of entity a Social Impact Fund invests in.
- Blended financeCombining conventional, return-seeking capital with concessional or philanthropic "social capital" in the same structure, so that the two kinds of money share risk and fund social outcomes together.
- Temporary borrowingThe only fund-level borrowing Category I and II AIFs may do: for temporary funding needs, for no more than 30 days, on no more than 4 occasions a year, and up to 10% of investable funds.
- National Investment and Infrastructure FundThe Government of India's own alternative investment fund, set up in 2015 as a Category II AIF to invest in infrastructure and strategic assets.
- Club DealA buyout in which several private equity investors act in concert to acquire the controlling stake, because no one fund can or will write the whole cheque.