SEBI Moves to Ease Co-Investment Norms for Alternative Investment Funds

According to reports, the Securities and Exchange Board of India (SEBI) has suggested giving investors more freedom to co-invest with alternative investment funds (AIFs). According to a media report, the regulatory board recommended lifting the ban on AIF investment managers offering advisory services for listed shares.

To put it simply, co-investment mainly enables the fund to concentrate on areas other than ticket size and portfolio management. Co-investments are typically offered by funds when an investment is too big to fit within the fund or to preserve control over an investment and foster ties with their LPs, who will be tapped for future fundraising.

Moreover, AIF is a privately pooled investment vehicle that collects money from investors in accordance with a predetermined investment policy and uses it as capital for the investors' advantage.

According to the research, under specific circumstances, it has been suggested that managers of AIFs be permitted to provide co-investment opportunities to AIF investors through the co-investment vehicle (CIV) model.

Separate CIV Scheme for Each Investment

Additionally, it stated that, in accordance with the shelf PPM for the CIV scheme submitted to the markets regulator, a distinct CIV scheme ought to be introduced for every co-investment in the prospective business being considered for investment under notification to SEBI.

 Up until now, co-investors were required to sell their shares at the same time as AIF on the same conditions and exit price, which limited investor flexibility and made the funds seek to loosen these regulations.

The change follows calls from venture capital and private equity firms to loosen co-investment requirements in the AIF route starting in 2022. In the meantime, SEBI loosened its regulations in February, allowing AIFs to retain their investments in dematerialised form as of July.

This is revealed at a time when SEBI is continuously changing the AIF industry's framework in response to input and difficulties. In September of last year, the regulatory body changed its framework for valuing AIF investment portfolios.

It stated that securities that were not listed, non-traded, or thinly-traded would be valued in accordance with the current mutual fund regulations (SEBI (Mutual Funds) Regulations, 1996).

Investor Awareness Gets a Boost with SEBI, Ministry’s ‘Niveshak Shivir’ Rollout

A strategic planning conference for the Niveshak Shivir project is held in Mumbai by SEBI and the Investor Education and Protection Fund Authority (IEPFA), which is part of the Ministry of Corporate Affairs.

Niveshak Shivir is a national investor support programme designed to increase financial literacy, lessen dependency on middlemen, and make it easier for investors to recover unclaimed profits and shares. Investors will be able to communicate directly with corporate representatives and Registrars and Transfer Agents (RTAs) for end-to-end support through the initiative's dedicated helpdesks.

Later this month, the "Niveshak Shivir" programme will be launched in Ahmedabad and Mumbai, with ambitions to spread to additional cities with significant amounts of unclaimed investor assets.