Sebi eases investment norms for AIFs operating in IFSC

Sebi on Friday said investment provisions for domestic Alternative Investment Funds (AIFs) will also be applicable for such entities operating in international financial services center (IFSC). The market regulator's circular comes after it held consultations with stakeholders and decided to harmonize 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 thereunder, 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 Sebi'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 centers. 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 (SMEs) 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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