Sebi proposes to relax AIF debt investment norms

Markets regulator Sebi connected Friday projected to easiness concern norms for Category II Alternative Investment Funds (AIFs), allowing them to put successful listed indebtedness securities with a recognition standing of 'A' oregon below.

The connection comes pursuing the imaginable shrinking of the beingness of concern opportunities successful unlisted indebtedness securities aft amendment to LODR (Listing Obligations and Disclosure Requirements) norms recently.

As per the LODR amendments, listed entities request to database each non-convertible indebtedness (NCD) securities connected the banal exchanges, which leads to imaginable shortage successful the availability of unlisted indebtedness securities for AIFs In its consultation paper, Sebi has projected "Category II AIF to put much than 50 per cent of their full investible funds successful unlisted securities, and/or listed indebtedness securities having recognition standing 'A' oregon below, straight oregon done concern successful units of different AIFs".

The Securities and Exchange Board of India (Sebi) has sought nationalist comments till February 28 connected the proposal.

By virtuousness of being close-ended funds and with the mandate of chiefly investing successful unlisted securities, Category II AIFs presume some liquidity hazard and recognition risk. By assuming specified risk, AIFs play a important relation successful providing much-needed superior to industries that whitethorn not person entree to accepted sources of backing oregon companies that are not astatine a signifier of their lifecycle to marque a nationalist offering.

With the amendment successful LODR norms, and considering that determination whitethorn beryllium a shrinkage of concern opportunities successful unlisted indebtedness securities universe, it merits information that the scope of Category II AIFs to put chiefly successful unlisted securities(>50 per cent) tin beryllium expanded to listed indebtedness securities also, Sebi noted.

However, the aforesaid whitethorn beryllium enabled successful specified a mode that specified AIFs inactive presume the owed recognition hazard successful the ecosystem, it added.

It is believed that the recognition standing of a information whitethorn beryllium an due parameter to ascertain recognition hazard profile. Therefore, it is viewed arsenic due that nether listed indebtedness securities, class II AIFs whitethorn beryllium nudged to put successful listed indebtedness securities with recognition standing 'A' oregon below, successful enactment with higher hazard appetite of AIFs.

The connection came aft Sebi received representations from AIF manufacture relation and from funds which predominantly put successful indebtedness securities, highlighting their concerns.

The regulator observed that determination are 192 schemes of Category II AIFs, which person invested much than 50 per cent of their concern successful unlisted debt.