FAQ'S

Investment

Who can invest with AssetFractio?

Any Resident Indian Individual OR Non-Individual, NRIs, OCIs

How can NRI’s invest with AssetFractio?

NRI investors can invest through a NRO or NRE Account or from a normal bank account in India. Your returns and sale proceeds, however, will be credited to your NRO account.

What is the minimum investment?

The fraction unit value is Rs 1000. The minimum initial investment is Rs. 100,000. Please note that this is subject to change.

Do you offer any guaranteed returns?

No, AssetFractio does not guarantee any returns. The returns on fractions’ investment result from income distribution (linked to income generated from underlying asset) and price appreciation. Price appreciation comes from either trading of fractions OR Asset Sale. However, please note that the investment in fraction may result in capital loss as its value is determined by market forces of demand and supply and fundamentals of the underlying asset.

How are your investments safe?

Your investments are absolutely secure regardless of what happens to AssetFractio.

Your investment is in the form of equity shares/compulsorily convertible debentures in a LLP/Private/Public Limited Company, incorporated solely for the purpose of acquiring and owning the asset. By virtue of holding equity shares in the Special Purpose Vehicle (SPV), you in turn own the asset. The securities are also in digitized form maintained in demat account.

The SPV is bound to comply with statutory and corporate governance requirements such as holding general meetings, filing returns, etc., that are undertaken by third-party such as Trustees, Company Secretary etc. With this, the ultimate decision-making power lies with the investors for all major governance decisions specific to SPV.

Thus, even if AssetFractio is not functional, your ownership and control of the asset remain secure.

How are the investments structured?

For each asset listed on the AssetFractio Platform, a Special Purpose Vehicle (SPV) is created in which funds are raised to purchase, own and manage the property.

Your investment shall be towards subscription of the shares/compulsorily convertible debentures (CCDs) of the SPV that holds the property and represents your fractional investment.

AssetFractio will provide asset management services to the SPV and undertake accounting, secretarial, reporting, leasing, maintenance, and other operational aspects under the asset management services contract with the SPV.

What is a SPV?

A Special Purpose Vehicle is an entity incorporated/created under the law, being a Limited Liability Partnership (LLP), a Private Limited Company, OR a Public Limited Company etc., for a specific lawful purpose. Any Asset listed on the AssetFractio platform will be owned by an SPV being a LLP/private/public limited company set up for this specific purpose.

When & how will I receive Investment returns?

The return on your investment is in the form of dividend paid on fractions and payment frequency is expected to be Quarterly/Monthly and subject to receipt of income from underlying asset. In addition, you can generate capital appreciation through trading of fractions on the AssetFractio Platform. The Capital Appreciation is dependent on various factors like demand and supply dynamics of fractions and fundamentals of underlying asset.

How will I be updated on the performance of my investments?

You can view the performance of your investment through your online dashboard.

Can I transfer my investment amount to any foreign currency?

The transfer of foreign currency by NRIs is regulated by extant RBI and FEMA guidelines.

How does the investment process work in detail?

The first thing you will need is a ID/Account which KYC/KYB verified, that can be used to sign into AssetFractio. The documents you will require for KYC/KYB are -

  • §  Copies of PAN Card and Aadhaar Card.
  • §  NRI investors need to provide a NRE and/or NRO account number.
  • §  Non-Individual entities will be required to submit additional documents like CIN, GST etc.

Once verified, you are ready to transact on the platform either through Initial Fraction Offering (IFO) OR through secondary purchase and sale on the platform.

It is primarily a process of issuance of fractions/securities, that represent the indirect partial ownership of an asset through IFO (Initial Fraction Offering) and further sale & purchase of the fractions on platform.

Step 1: SCREENING of Real Assets

Step 2: IDENTIFICATION of Asset through DUE DILIGENCE

Step 3: ASSESSEMENT of Investors’ Interest

To transact in IFO, all you need to do is click on the ‘I’m interested’ button and confirm your investment details. You will receive access to all necessary documents related to property and IFO for your perusal and scrutiny.

If you decide to subscribe to IFO, you will need to e-sign a binding Expression of Interest (EOI) and transfer the initial 10% advance to your virtual account under Escrow Account, which you will find on your dashboard.

Step 4: OBTAIN FULL COMMITMENT from Investors

Once 100% commitment is received from interested investors, the primary offering opportunity is considered to be fully funded. You will then be required to transfer the remaining amount into your virtual account under Escrow Account.

Step 5: CREATION OF SPV

Your investment amount will then be routed from Escrow Account to the to the bank account of the SPV. The SPV will then proceed to purchase the asset

Step 6: TRANSFER Asset to SPV

Step 7: INITIAL ISSUANCE of Fractions that represent the partial ownership of SPV

You will be allotted equity shares/compulsorily convertible debentures (CCDs) in the LLP/Private/Public Limited Company and issued corresponding Fractions/Tokens representing the above into your own demat and wallet accounts respectively.

Now Fractions/Tokens are essentially representing your fractional ownership of the underlying asset of SPV.

Step 8: DISTRIBUTE Proportionate Income generated from Asset

Any income generated by the underlying asset shall be proportionally distributed to the investor regularly after deducting any expenses such as Property management Fees and SPV maintenance expenses etc.

Step 9: EARN Capital Appreciation through Sale & Purchase of Fractions on the Platform OR Asset Sale

Step 10: TRACK Portfolio of Fractions

What happens if a property does not get fully funded in IFO?

In an unlikely event that a property on our platform doesn't complete its funding target, any funds that have been committed by investors will be reimbursed to the verified bank account with interest at the prevailing interest rates.

What is the timeline of the IFO?

AssetFractio generally shall have a time frame of 90 days to ensure that the property receives complete funding, registration of property under SPV and allotment of corresponding shares/CCDs (i.e. Fractions) into the respective investor’ accounts. However, we look to reduce this time period as the platform continues to grow and mature.

Do I have to visit location of the property before investment?

No, there is no need to visit the property in person. We do the due diligence and share all the relevant documents for your review to enable your investment decision.

Do I have to visit your office to invest?

No, All documentation will be signed through a reputed digital signature provider like DocuSign/AdobeSign/ZohoSign

What if I want to withdraw my initial advance?

Once an initial investment or advance is paid, a termination fee shall apply for any withdrawals. The fee will be as per the terms mentioned in the Expression of Interest.

Is there any lock-in on my investment?

No, there is not any lock-in from the time the property is registered with SPV and fractions are issued. However, we encourage the investors to invest from a medium to long term perspective to get full benefits of capital appreciation of the property.

How can I exit my investment?

You can exit your investment any time but preferably we would like the investors to hold the fractions for a reasonable time period to get the full benefits from the asset.

The exit of investment can be done in following ways.

  • Fraction Sale in Secondary Market:

    You can exit the fractions through OFFER FOR SALE/AUCTION on AssetFractio Platform.

  • Asset Sale by SPV:
    If a lucrative opportunity for selling the asset is available to SPV, AssetFractio as the asset manager shall take the necessary steps to evaluate the opportunity. After evaluation, AssetFractio will present it to the fractions’ investors through the platform to decide if the asset is to be liquidated or held.

    If at least 75% of the shareholders vote to sell, we will begin the process of liquidation. All related reports and documents to assist the investors in making their decision shall be provided by AssetFractio.

    Once the asset is sold, the gains (post any taxes and fees) shall be distributed amongst securities’ holders and remitted to the respective registered bank accounts.

    If shareholders vote to hold, the investment will continue as is, until the next poll where the process will be repeated.

Will there be a management fee when the property is not tenanted?

No, there will be no management fee charged to investors for as long as the property is not tenanted.

Who manages the asset?

AssetFractio will take care of all aspects related to the asset.

Should I engage an attorney or lawyer?

AssetFractio undertakes the legal due diligence of the property before it is purchased by the SPV. All investment and property-related legal processes are handled by AssetFractio.

However, you are welcome to seek tax and legal advice from your advisors to understand if the opportunity listed is suited for you. Should you engage any legal/tax advisor, we will be happy to answer any questions that they may have.

What kind of documentation will I need to sign?

To begin with, you will be required to sign an Expression of Interest to confirm your commitment and remit 10% of your investment amount.

Following this, a Drawdown Notice will be sent to you once the opportunity has 100% commitment from all interested investors post which you may remit the remaining funds towards your investment.

This is followed by the Offer Letter for private placement of securities and execution of Share Securities Subscription Agreement (SSA) with the SPV. The SPV also executes the Asset Management Agreement with AssetFractio for which you will be executing a consent letter.

At the time of resale/liquidation of your holding in the SPV, you will be required to execute securities transfer documentation which includes a request letter for the transfer of securities, a deed of adherence to the SSA, and securities transfer forms.

All these documents shall be executed through an e-signing process complete with an audit trail and no physical copies will have to be signed. This makes your investment process completely digital, fast, transparent, and very convenient.

How does AssetFractio ensure that property titles are in the clear?

AssetFractio has an experienced team that performs thorough financial, technical and legal due diligence before listing any property on our platform. We engage reputed Tier-I law firms to conduct due diligence on the property title.

Are investors allowed to see the property related documents and IFO related documents?

Yes, you can view all the asset-related documents including the Lease/Rental/Tenancy Agreement/ Deed or Leave & License Agreement uploaded on the investor’s respective dashboards.

Taxation

Miscellaneous