SEBI last month amended the rules relating to portfolio managers to facilitate co-investment by investors of AIFs through the portfolio management route.
Capital markets regulator Securities and Exchange Board of India (SEBI), on December 10, came up with the process of launching co-investment services through the portfolio management route.
This comes after SEBI last month amended the rules relating to portfolio managers to facilitate co-investment alternative investment fund investors (AIF) through the Portfolio Management route.
In a circular, the regulator has said that a manager aif who is also a registered Portfolio Manager, and intends to offer co-investment services through the Portfolio Management route, shall do so only after prior intimation to SEBI.
It further said that any other manager who is not a registered Portfolio Manager and wishes to provide co-investment services through the Portfolio Management route, shall have to take registration as a Portfolio Manager from SEBI.
Pursuant to grant of registration, if such Portfolio Manager desires to offer Portfolio Management Services (PMS) other than co-investment, he shall be subject to compliance with all the provisions of PMS Rules including eligibility criteria and prior approval of SEBI. ,
With regard to periodic reporting, the regulator said that portfolio managers will have to submit a monthly report regarding their portfolio management activity on the portal of the intermediaries within seven working days of the end of each month.
It needs to be submitted as per the revised format, which contains the details of co-investments offered by the Portfolio Manager.
In addition, Portfolio Managers will be required to submit a report to their clients on quarterly basis as per the revised format which contains the details of co-investments offered by the Portfolio Manager.
The reporting requirements under the revised formats will be applicable from April 2022 for monthly reports to SEBI and quarterly reports to clients.
The regulator clarified that the provisions for direct on-boarding of clients along with fees and charges by specified portfolio managers under PMS rules will not be applicable to co-investment services.
These provisions will remain unchanged for portfolio management services other than co-investment.
Under the PMS Regulations, no upfront fee shall be charged from the clients, directly or indirectly, by the Portfolio Managers.
Also, operating expenses, excluding brokerage, shall not exceed 0.50% per annum of the average daily asset management (AUM) of the client, in excess of the fee charged for the portfolio management service.
As per the rules, at the time of direct on-boarding of the customers, no charges other than the statutory charges will be levied.
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