Capital markets regulator Sebi has amended the rules regarding investment aspects of certain categories of Alternative Investment Funds (AIFs). Under the rules, Category III AIFs may not invest more than 10 percent of the investable funds in a company invested in, either directly or by investing in units of other AIFs, Sebi said in a statement on Wednesday.

Capital markets regulator Sebi has amended the rules regarding investment aspects of certain categories of Alternative Investment Funds (AIFs). Under the rules, Category III AIFs may not invest more than 10 percent of the investable funds in a company invested in, either directly or by investing in units of other AIFs, Sebi said in a statement on Wednesday.

Different types of funds such as hedge funds, PIPE Funds, etc. are registered as Category III AIFs. In addition, the high quality funds for accredited investors of category III AIFs may invest up to 20 percent of the investable funds in an investee company, either directly or through investment in units of other AIFs.

This is provided that for investments in listed shares of a company invested in, Category III AIFs are allowed to charge the investment limit of 10 per cent of the investable funds or the net asset value of the scheme, while large value funds for Category III AIFs accredited investors can calculate the investment limit of 20 percent of the investable funds or the net asset value of the scheme.

The new standards, called Sebi’s AIF Regulations, called 2022, came into effect from Wednesday. In November 2021, the regulator allowed Category III AIFs, including large value funds for accredited investors of Category III AIFs, to calculate the concentration standard based on the net asset value (NAV) of the fund for investments in listed shares of a company in which is invested.

AIFs refer in market language to a private pooled investment vehicle that collects money from investors, both Indian and foreign, to invest these funds in India. Broadly speaking, the AIF rules apply to venture capital funds, private equity funds, SME funds and hedge funds, among others.


This post Sebi adjusts rules for alternative investment funds was original published at “https://www.financialexpress.com/market/sebi-amends-rules-governing-alternative-investment-funds/2463995/”

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