Sebi doubles AIF, VCFs’ overseas investment cap

MUMBAI: Markets regulator Sebi on Friday allowed alternative investment funds (

AIFs

) and venture capital funds (

VCFs

) to collectively infuse up to $1.5 billion in overseas markets, up from $750 million. The decision was taken in consultation with the RBI, a circular from the markets regulator said.


Under Sebi rules, AIFs and VCFs need to mandatorily disclose the utilisation of

overseas investment limits

within five working days of such usage on the market regulator’s intermediary portal. Also, if an AIF or a VCF do not utilise its overseas limit within six months since Sebi’s approval, that should be reported within two working days after expiry of the validity period.

In the backdrop of a sharp rise in investments by AIFs outside of India, the Indian Venture Capital Association (IVCA) wrote to Sebi to enhance the limit of $750 million, which was last hiked in 2018. The assets managed by AIFs in India recorded a CAGR of nearly 500% from December 2012 to December 2020, with the cumulative size at Rs 4.4 lakh crore by end-2020. “In a highly globalised world, asset diversification in terms of geographies adds a significant alpha to a fund manager’s performance. In view of this, Sebi allows Indian AIFs to invest up to 25% of their investable corpus overseas,”

Siddarth Pai

, co-chair of Regulatory Affairs Committee, IVCA, said.

According to Sahil Shah of

J Sagar Associates

, a leading corporate legal advisory firm, this enhanced limit “is a positive move in these uncertain times which will open newer windows of opportunities for various VCFs / AIFs in India for them to invest outside India and also allow the Indian investors to be a part of the global growth trajectory”.