SEBI Board Meeting: Alternative Investment Fund Industry Could See Major Reforms
The Securities and Exchange Board of India is set to have its board meeting on June 18 and a slew of important market reforms are on agenda, including major changes for the Alternative Investment Fund industry, people in the know told NDTV Profit.
As per the draft paper released by the regulator on May 9, suggestions were made for AIF investors to have co-investment opportunities in unlisted companies through a co-investment vehicle. This is likely to be up for discussions in the upcoming Wednesday meeting.
Currently, if an investor in an AIF wants to put additional money into a company that the AIF is investing in, it has to be done outside the AIF structure—typically through the Portfolio Management Services route. But this route has several limitations.
These include PMS regulations restricting investments in unlisted companies, PMS clients having the option to exit early, which may not align with the AIF's timelines and finally, investment managers not being allowed to advise co-investors on listed securities under the current rules.
Because of these restrictions, the AIF industry has been asking SEBI to allow co-investments to be done within the AIF itself, but in a separate scheme or unit. SEBI had initially rejected this idea to maintain the pooled nature of AIFs, where all investors share profits and losses based on their contribution. However, after further discussion and industry feedback, SEBI is now reconsidering.
The markets regulator is proposing a new model where AIFs can launch a separate CIV for each co-investment opportunity. These CIVs will be linked to the main AIF but will function as separate schemes with their own registration.
SEBI's working group on 'Ease of Doing Business' found several issues with the current PMS-based co-investment model. These include increased costs, complex paperwork, delays in deal closures, and a lack of flexibility. Foreign funds, not subject to these constraints, have an advantage over domestic fund managers when competing for big-ticket deals in India.
By allowing co-investments within the AIF structure, SEBI hopes to level the playing field.
-
Indians Are Travelling, But Not Every Journey Is A Holiday | The Week In Whys
Pilgrims, patients and working women are the real travellers, and the system hasn't quite caught up with them.
-
Getting To Work Costs Women More | The Reason Why
It is not just about women paying more than men. It is about women paying much more in cities than in villages.
-
AI Bias In Investing Cannot Be Eliminated, But It Can Be Governed
Framing is a particularly important example as identical financial information presented in terms of gains rather than losses can lead an LLM to reach a different assessment.
-
Joining The Dots | Dark Skies, Steady Diya: Why Hope Holds This Diwali
With war, a weak rupee and foreign outflows weighing on sentiment, policymakers at the NDTV World Summit and market veterans at NDTV Profit Ignite: Diwali Edition offered the same advice: stay invested and filter out the noise.
-
The Curious Case of Equitas Small Finance Bank And A CEO Who Quit For Stock
PN Vasudevan believes persistent investor concerns over a perceived conflict of interest had become a governance overhang on Equitas Small Finance Bank's stock, even as the lender improved profitability and asset quality.
-
Talking Points This Week: AI Cash Burn, A Tiger Comeback And An India That Still Finds Its Own Path
India is not immune to higher oil or tighter global liquidity, yet its earnings base is broader, its domestic policy levers are still available.
-
Foreign Investors Own Half Of HDFC Bank and ICICI Bank. An LTCG Cut Could Matter Most Here
Foreign portfolio investors have US$115 billion parked in HDFC Bank, ICICI Bank. If the government cuts long-term capital gains tax, Jefferies says returning foreign money could land here first.
-
'Never Seen This Level Of Negativity': Sandeep Tandon Says The Next Rally May Be Closer Than You Think
Veteran investor Sandeep Tandon says foreign selling is easing, large-caps are due a comeback and mid-caps are crowded, while he turns positive on gold, power and pharma this Diwali.
-
Indians Stay With Family, Not In Hotels | The Reason Why
India still lacks enough clean, reliable and affordable hotels for budget-conscious travellers.
-
The Economic Imperative: Analysing The Material Driving Force Behind India-Canada Strategic Reset
This economic complementarity is further reinforced by deep institutional investment ties and talent mobility, which form the bedrock of the bilateral framework.
