Summary: SEBI has introduced new Amendment Regulations and a CIV Circular allowing Category I and II AIFs to offer co-investment opportunities through Co-investment Schemes (CIV schemes). This provides an alternative to the existing Co-investment Portfolio Manager route under PMS Regulations. The new framework addresses limitations like additional registration costs and investor profile concerns. Key features
Alternative investment funds (“AIF”) being considered an investment avenue for sophisticated investors with high risk-appetite and ticket-size, are subject to certain restraints in their marketing and placement to keep it restricted to the intended investors. The Securities and Exchange Board of India (“SEBI”) (Alternative Investment Funds) Regulations, 2012 (“AIF Regulations”) define an AIF as[1] “a privately pooled investment vehicle which collects funds from investors, whether Indian or foreign, for investing it in accordance with a defined investment policy for the benefit of its investors…”. Regulation 11[2] further provides that an “AIF shall raise funds through private placement by issue of information memorandum or placement memorandum, by whatever name called”. Moreover, it has been provided[3] that no scheme of an AIF shall have more than 1000 investors and where an AIF is set-up as a company, the provisions of the Companies Act, 2013 shall apply.[4]Continue Reading AIF Marketing in India: What Fund Managers Must Know
The Securities and Exchange Board of India (“SEBI”), vide its settlement order dated May 06, 2025 (“Order”), has accepted a settlement application filed by the investment manager (“Manager”) of a real estate fund (“Fund”), sponsored by a related sponsor entity (“Sponsor”), for breach of various provisions of the SEBI (Alternative Investment Funds) Regulations, 2012 (“AIF Regulations”)[1], and the SEBI Master Circular for Alternative Investment Funds, dated May 7, 2024 (“Master Circular”)[2], subject to a payment of INR 36 lakh by the Manager on behalf of itself and the Fund. The Settlement Order emanated from a suo-moto application, seeking settlement of issues pertaining to conflict of interest and non-compliances in operations of the Fund.Continue Reading SEBI Order casts Spotlight on Conflicts of Interest of AIFs
The Securities and Exchange Board of India (“SEBI”) through its circular dated December 13, 2024 (“Circular”), along with Implementation Standards issued by the Standard Setting Forum for AIFs (“SFA”), introduced guidelines to ensure fair and equitable treatment of investors in alternative investment funds (“AIFs”), making pro-rata and pari passu rights an essential feature of AIF structures.Continue Reading Pro-rata and Pari-Passu Rights: Regulating the Differential Rights for AIF Investors
The Securities and Exchange Board of India (“SEBI”), as part of its ongoing regulatory reforms, released a consultation paper on February 7, 2025, seeking public comments to review Regulation 17(a) of the SEBI (Alternative Investment Funds) Regulations, 2012 (“AIF Regulations”). The objective is to enhance investment flexibility for Alternative Investment Funds (“AIFs”), particularly in debt securities, while addressing concerns arising from recent regulatory changes by way of allowing Category II AIFs to make up to 100% of their investment in certain listed debt securities as explained in detail below. As of now, Category II AIFs are allowed to make less than 50% of their investments in listed securities.Continue Reading SEBI Proposes to Unlock Listed Debt Markets for Category II AIFs
The Reserve Bank of India (“RBI”) vide its circular dated May 21, 2024 (“Circular”),[1] has required that issuance of partly paid-up units by Alternative Investment Funds (“AIFs”) to foreign investors prior to March 14, 2024, should be regularised through compounding under Foreign Exchange Management Act, 1999 (“FEMA”). Compounding by RBI is prescribed for the contravention of foreign exchange regulations as per Foreign Exchange (Compounding Proceedings) Rules, 2000, and involve payment of a fees. In many instances, compounding requires payment of a monetary penalty to RBI.Continue Reading The Reserve Bank Of India Mandates Compounding For Issuance Of Partly Paid-Up Units By AIFs Prior To March 14, 2024
The Securities Exchange Board of India (“SEBI”) has notified amendments to the SEBI Alternative Investment Funds Regulations, 2012 (“SEBI AIF Regulations”) on April 25, 2024, to:Continue Reading FAQs on Regulatory Amendments to AIF Regulations (Ambiguous GAAR Style Obligations Prescribed for Managers and KMPs)
In a recent order[1] (“Order”), the Securities and Exchange Board of India (“SEBI”) held that a category I alternative investment fund registered with it (“Fund”); its investment manager (“Manager”); and its trustee (“Trustee”), were in violation of certain SEBI (Alternative Investment Funds) Regulations, 2012 (“AIF Regulations”). Specifically, these violations were with respect to provisions associated with (i) the code of conduct applicable to the Fund, Manager and Trustee; and (ii) provisions related to leverage and borrowings applicable to the Fund.Continue Reading SEBI Adjudicates on Pledging of Securities held by Category I AIFs
The Securities and Exchange Board of India (“SEBI”) released five consultation papers on proposed changes in regulatory norms for alternative investment funds (“AIFs”), inviting comments from the public, on February 03, 2023. These consultation papers indicate the next generation of regulatory reforms that SEBI has planned for AIFs.Continue Reading SEBI Unveils Next Generation Reforms for AIFs
The rise of domestic capital in alternative asset space requires the AIF Regulatory Platform be made available to In-house Funds
The Indian growth story has been propelled by alternative asset classes that witnessed an unprecedented inflow of domestic and foreign capital in the last few years. Alternative Investment Funds (“AIFs”) have played an essential role in this and have raised, as on June 30, 2022[1], a whopping INR 6,94,520 crore (Indian Rupees Six lakh ninety-four thousand and five hundred twenty crore), of which actual deployed capital stands at INR 3,11,343 crore (Indian Rupees Three lakh eleven thousand and three hundred forty-three crore). These numbers are up from INR 2,90,339 crore (Indian Rupees Two lakh ninety thousand and three hundred thirty-nine crore) of capital raised and INR 1,19,758 crore (Indian Rupees One lakh nineteen thousand and seven hundred fifty-eight crore) of actual capital deployed, as on June 30, 2019[2]. Securities and Exchange Board of India (“SEBI”), being the capital market regulator in India, has played an active role in streamlining the AIF industry. SEBI’s proactive and investor-friendly approach is often reflected in the discourses with market participants as well as in the guidelines / circulars / regulations issued for the AIF industry.Continue Reading An Argument for In-house Alternative Investment Funds