Co-investment Opportunities by constituents of AIFs  

PUBLISHED ON: 16-11-2021

SEBI has amended the SEBI (Alternative Investment Funds) Regulations, 2012

and the key changes are set out hereunder:

• “Co-investment” definition has been added, which means the investment made by the Manager, Sponsor or investor of Category I AIF and Category II AIF in investee companies, where such Category I AIF or Category II AIF makes investment, which would be through a co-investment portfolio manager.
• The terms of exit from the co-investment (including time of exit) from an investee company are required to be identical to the terms of exit applicable to the AIF.
• Earlier, there was no distinction in the investment limits by Category III AIF in listed or unlisted space. Now, the investment limits for investments made by Category III AIF would be computed in the following manner:

vFor listed equity, on the basis of the net asset value; and

vFor securities other than listed equity, on the basis of investible funds.

• The Manager of an AIF is restricted from providing advisory services to any investor. However, such restriction is not appliable to clients of the Co-investment Portfolio Manager who also invest in securities of such investee companies where the said AIF makes investment.

The aforementioned changes have been made vide a notification dated November 9, 2021, which was published in the Official E-Gazette on November 10, 2021 (available here).