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Sebi proposes tenure extension for AIFs to continue unliquidated investments

Business Standard  

Capital market regulator the Securities and Exchange Board of India (Sebi) has proposed to allow alternate investment funds (AIFs) to carry forward the unliquidated investments of a scheme beyond their tenure period. At present, AIFs can extend the tenure of the scheme by two years upon approval from two-third investors. After expiration of the tenure, the AIF has to fully liquidate the scheme within a year. Sebi has proposed that AIFs and Large Value Funds for Accredited Investors (LVFs) be permitted to close the existing scheme and transfer the unliquidated investments to a new scheme on receiving consent from 75% investors by value. This option will be provided beyond the present two-year extension at the end of tenure of the scheme. The Alternative Investment Policy Advisory Committee (AIPAC) has also recommended that the value at which the exit is proposed along with valuation carried out by two independent agencies will have to be disclosed to all investors. In case the minimum bids are not received then the valuation of the scheme will be determined under IBBI (Insolvency Resolution Process for Corporate Persons) Regulation or IBC regulations. Under the proposed norms, a fund manager's performance will be computed on the basis of exit or liquidation value provided to the investors. This data will also be included in the track record of the manager for subsequent schemes.