Sebi allows alternative investment funds in real estate, private equity

Market regulator Sebi has allowed seven Alternative Investment Funds (AIF) to set shop in the country under a newly formulated route, which allows pooling of funds for investments in areas like real estate, private equity and hedge funds.

The approval has been given to all the seven AIFs by the Securities and Exchange Board of India (SEBI) in a period of less than one month, as per the information available with the market regulator.

Sebi had notified its guidelines in May for AIFs, which are funds established or incorporated in India for the purpose of pooling in of capital from Indian and foreign investors for investing as per a pre-decided policy.

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[caption id=“attachment_421480” align=“alignleft” width=“380”]  The approval has been given to all the seven AIFs by SEBI in a period of less than one month. Ibnlive[/caption]

As per Sebi data, six AIFs have got registered with the regulator during August 2012, while one was granted registration on July 23. In a board meeting held yesterday, Sebi had decided that the promoters of listed companies can offload 10 percent of equity to AIFs such as such as SME Funds, Infrastructure Funds, PE funds and Venture Capital Funds registered with the market regulator to attain minimum 25 per cent public holding.

Under Sebi guidelines, AIFs can operate broadly in three categories and it is mandatory for them to get registered with the regulator. The Sebi rules apply to all AIFs, including those operating as private equity funds, real estate funds and hedge funds, among others.

The seven AIFs that have got registered with Sebi include IFCI Syncamore India Infrastructure Fund, Utthishta Yekum Fund, Indiaquotient Investment Trust, Forefront Alternate Investment Trust, Excedo Realty Fund, Sabre Partners Trust and KKR India Alternate Credit Opportunities Fund.

The Category I AIFs are those funds that might get certain incentives or concessions from the government, Sebi or other regulators in India and include Social Venture Funds, Infrastructure Funds, Venture Capital Funds and SME Funds.

The Category III AIFs are those trading with a view to make short term returns and include hedge funds, among others. The Category II AIFs are those funds which can invest anywhere in any combination but are prohibited from raising debt, except for meeting their day-to-day operational requirements.

These AIFs include PE funds, debt funds or fund of funds, as also all others falling outside the ambit of Category I and Category III.

PTI