Sebi modifies the rules governing certain types of alternative investment funds


Capital markets regulator Sebi has changed the rules relating to the investment aspects of certain categories of alternative investment funds (AIFs).

Under the rules, Category III AIFs cannot invest more than 10% of investable funds in a beneficiary company, either directly or through investments in shares of other AIFs, Sebi said in a notification on Wednesday.

Various types of funds such as hedge funds, PIPE funds, etc. are registered as Category III AIFs.

In addition, high value funds for qualified investors of Category III AIFs may invest up to 20% of investable funds in a beneficiary company, either directly or through investments in units of other AIFs.

It is provided that for investments in listed shares of a beneficiary company, Category III AIFs may calculate the investment limit of 10% of the investable funds or the net asset value of the scheme, while the funds of great value for qualified Category III investors AIFs can calculate the investment limit of 20% either of the investable funds or of the net asset value of the fund.

The new standards called AIF regulations of Sebi, 2022 came into force on Wednesday.

In November 2021, the regulator allowed Tier III AIFs, including high-value funds for investors qualifying as Tier III AIFs, to calculate the concentration standard based on the net asset value (NAV) of the investment fund in listed shares of a beneficiary company.

AIFs, in market parlance, refer to a private pool investment vehicle that raises funds from Indian or foreign investors to invest those funds in India.

Broadly speaking, AIF rules govern venture capital funds, private equity funds, SME funds, hedge funds, among others.

(Only the title and image of this report may have been edited by Business Standard staff; the rest of the content is auto-generated from a syndicated feed.)

Dear reader,

Business Standard has always endeavored to provide up-to-date information and commentary on developments that matter to you and that have wider political and economic implications for the country and the world. Your constant encouragement and feedback on how to improve our offering has only strengthened our resolve and commitment to these ideals. Even in these challenging times stemming from Covid-19, we remain committed to keeping you informed and updated with credible news, authoritative opinions and incisive commentary on relevant topical issues.
However, we have a request.

As we battle the economic impact of the pandemic, we need your support even more so that we can continue to bring you more great content. Our subscription model has received an encouraging response from many of you who have subscribed to our online content. More subscription to our online content can only help us achieve the goals of bringing you even better and more relevant content. We believe in free, fair and credible journalism. Your support through more subscriptions can help us practice the journalism we are committed to.

Support quality journalism and subscribe to Business Standard.

digital editor


Comments are closed.