In a notification, SEBI said, “Co-investment by investors of alternative investment funds shall be through a co-investment portfolio manager.”
Markets regulator Securities and Exchange Board of India (SEBI) has amended the regulatory regime governing Alternative Investment Funds (AIFs) to facilitate co-investment through the portfolio management route.
Co-investment means investment made by a manager or sponsor or investor of Category-I and -II AIFs in companies where such category of AIF invests.
In a notification on Tuesday, SEBI said, “Co-investment by investors of alternative investment funds shall be through a co-investment portfolio manager.” The regulator said the conditions for co-investment by a manager or sponsor or co-investor in an investor company shall not be more favorable than the conditions for investment of an AIF.
It further said that the conditions of exit from co-investment in the investee company, including the time of exit, shall be similar to the conditions applicable for exit of an AIF.
This framework will be applicable only for co-investments made on or after December 9.
The Manager Co-Investment shall not provide advisory services to any investor other than the clients of the Portfolio Manager for investing in securities of the investee companies where the AIFs managed by him make investments.
The regulator has allowed Category-III AIFs to calculate concentration norms based on the net asset value of the fund.
SEBI said Category-III AIFs shall not invest more than 10% of the net asset value in the listed equity of an investment company. They shall not invest more than 10% of the investible fund in securities other than the listed equity of the investee company, either directly or by way of investment in units of other AIFs.
Provided that accredited investors of Category-III AIF, large value funds may invest up to 20% of the net asset value in the listed equity of an investment company. They can invest up to 20% of the investible fund in securities other than the listed equity of the investee company either directly or by way of investment in units of other AIFs.
To give effect to this, the regulator has amended the AIF norms. This comes after SEBI’s board approved a proposal in this regard in late September.
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