The Securities and Exchange Board of India on Friday said investment provisions for domestic Alternative Investment Funds will also be applicable for such entities operating in international financial services centre.
The market regulator's circular comes after it held consultations with stakeholders and decided to harmonise the provisions governing investments by AIFs incorporated in IFSC with those applicable to domestic AIFs.
“Accordingly, AIFs incorporated in IFSC shall be permitted to make investments as per the provisions of the SEBI (Alternative Investment Fund) Regulations, 2012, and the guidelines and circulars issued there under, including the operating guidelines for AIFs in IFSC,” it said.
SEBI (Alternative Investment Fund) Regulations pertain to provisions for domestic AIFs.
All other conditions specified in the regulator's 2017 circular for AIFs operating in IFSC shall remain unchanged, the regulator added.
In 2017, SEBI allowed alternative investment funds operating in IFSC to invest in securities listed in such centres. Besides, it permitted them to invest in securities issued by companies incorporated in IFSC.
Alternative Investment Fund or AIF refers to any fund established or incorporated in India which is a privately pooled investment vehicle which collects funds from sophisticated investors, whether Indian or foreign, for investing in accordance with a defined investment policy for the benefit of its investors.
Based upon the investment in the fund, they are divided into three categories -- Category-I AIF, Category-II AIF, Category-III AIF.
Category-I funds invest in start-ups, small and medium-sized enterprises and venture capital. Category-II funds include private equity funds, real estate funds, among others. Category-III AIFs include hedge funds.
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