Sebi seeks investment information from AIF custodians

The Securities and Exchange Board of India (SEBI) ordered the custodians of AIFs on Monday to indicate, among other things, the names of investee firms, the quantum of each investment, the investable surpluses on that particular day of the investment, and if the investee company is an ‘affiliate’ of the fund.

Sebi is reported to be keeping a tight eye on Alternative Investment Schemes (AIFs), the regulatory term for private equity and venture capital firms, as they expand fast. Investors have committed about 2 lakh crore to AIFs in 2022-23, up from 1.9 lakh crore the previous year. Category I and II AIFs, which include venture capital, infrastructure, real estate, private equity, and stressed asset funds, are permitted to invest up to 25% of their investable capital in a single firm. Experts believe that there are various monitoring difficulties connected to associate investments, fund of funds, and offshore investments. Regulators want to make sure that there are no potential red flags.

Other information requested by Sebi from fund custodians includes the type of investee company and securities, the amount of offshore investments, the net asset value of the scheme as of the date of investment, and the percentage of equity investment relative to the total paid-up capital of the investor.