Alternate investment funds: AIF investments in India set to hit record high

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Mumbai | Published: December 15, 2018 2:01:24 AM

Notwithstanding the volatility in the markets in calendar year 2018, alternate investment funds (AIFs) flows are set to hit a record high this year with commitments worth over Rs 2 lakh crore, and corporate funds worth Rs 1 lakh crore already raised, Securities and Exchange Board of India (Sebi) chairman Ajay Tyagi said.

aif, aif investmentsIn Q1FY19, commitments worth Rs 1.79 lakh crore were raised and Rs 97,611.73 crore worth of funds were raised.

Notwithstanding the volatility in the markets in calendar year 2018, alternate investment funds (AIFs) flows are set to hit a record high this year with commitments worth over Rs 2 lakh crore, and corporate funds worth Rs 1 lakh crore already raised, Securities and Exchange Board of India (Sebi) chairman Ajay Tyagi said.

“As on September 2018, 476 AIFs raised funds. There is a recent spurt in AIFs which has gone up by 117% from March 2016 to March 2017 and further 96% from March 2017 to March 2018. For the same period, total funds raised have gone up by 80% and 108%, respectively,” Tyagi said.

Interestingly, since June 2017, more than 50% of the commitments are being met. In Q1FY19, commitments worth Rs 1.79 lakh crore were raised and Rs 97,611.73 crore worth of funds were raised.

Tyagi said Sebi has repeatedly revised regulations following feedback from market participants, in addition to taking care of investors. This has shown positive results and is likely to show growth in coming years. He, however, pointed out that though InVITs, ReITs and municipal bonds are gradually gaining importance, much more is needed to be done.

Recently, 7 InViTs and 2 ReITs got registered with Sebi. Three InVITs have issued and listed more than Rs 10,000 crore. “While municipal bond market’s progress has been slow, we need to improve further. Two municipal corporations — Pune and Greater Hyderabad — raised Rs 400 crore through issuance of corporate bonds in 2017-18. Additionally, Indore, Hyderabad and Bhopal have together raised Rs 470 crore so far in this financial year,” Tyagi said.

In September, Embassy Office Parks, a joint venture of US private equity firm Blackstone Group and Embassy Group, filed its draft offer document with Sebi for a Rs 5,000-crore ReIT issue.

On November 26, 2018, Sebi released operating guidelines for AIFs in International Financial Services Centres (IFSC). Earlier, AIFs were permitted to invest in India through the FPI route. Now, an AIF operating in IFSC is permitted to make investment.

“There may be a notable reduction in costs for setting up fund structures in IFSC as compared to setting up of offshore feeders. Overlaps between IFSC AIF guidelines and general foreign exchange and taxation laws will be resolved,” Siddharth Shah, partner at Khaitan & Co, said in a report.

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In May 2012, Sebi released regulations, wherein it had envisioned to extend the perimeter of regulation to unregulated funds with a view to systemic stability, increasing market efficiency, encouraging formation of new capital and consumer protection.

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