The Securities and Exchange Board of India (Sebi) on Friday issued new norms for reporting alternative investment funds’ (AIFs) unit value to depositories, effective immediately. Category I and II of AIFs will now have to calculate their investment value by an independent entity at least once in every six months, as per a Sebi circular. This time period can be extended to one year if approved by at least 75% of investors based on their AIF investment value.
For category III AIFs, the Net Asset Value (NAV) will be independent from the fund management function. Such NAVs should be disclosed to investors at intervals; on a quarterly basis for close-ended funds and monthly for open-ended funds, Sebi said.
Valuation Mandates
Category I includes venture capital, small and medium enterprises, social venture, and infrastructure funds while category II has private equity and real estate funds. The category III AIF involves hedge funds and complex trading strategies.
AIFs must upload their latest NAV to the depository system before May 1 or within 30 days from the date of the valuation of the portfolio, whichever is earlier, as per the circular. AIFs can raise funds from any investor, be it an Indian, foreign or non-resident Indian by way of issuing units in dematerialized form.
Digital Transparency
The AIF manager will be responsible for timely and accurate uploading of NAV. Sebi also said that depositories should build necessary infrastructure for uploading NAV and for the reflection of the same in the system.
Sebi has been introducing norms and seeking public comments for easing rules for AIFs. On Thursday, it had issued a consultation paper for relaxing exit norms for AIFs and allowing retention of funds beyond a scheme’s tenure.