Private Equity

Fund News

SEBI directs AIFs to ring-fence assets and liabilities of each scheme

Business Line  

Capital markets Market regulator Securities and Exchange Board of India (Sebi) has mandated that assets and liabilities of each scheme of an Alternative Investment Fund (AIF) must be segregated and ring-fenced from other schemes of the Fund. The move will allow AIF managers to launch multiple schemes and go to market quicker. SEBI has now mandated the segregation of schemes of AIF on the same lines as those already prescribed for mutual funds. Till now, when a single scheme faced liability, the question was whether the assets of other schemes of an AIF could be used to discharge that liability. This ambiguity had created friction for investors and AIF managers. Meanwhile, SEBI has now amended the AIF Regulations to introduce a timeline for the first close of an AIF scheme, which is now required to be declared within a year of the scheme being taken on record. This has been extended to existing schemes, which have not yet declared their first close.