The Securities and Exchange Board of India, in its board meeting on Wednesday, allowed Category I and II Alternative Investment Funds to offer co-investment opportunities within the AIF structure, providing greater flexibility and supporting capital formation in unlisted companies.
The regulator defined co-investment as an investment made by an AIF manager or sponsor or by an AIF investor in unlisted investee companies where such funds usually invest.
Under current regulations, co-investment for AIF investors is facilitated through Co-investment Portfolio Managers under PMS Regulations.
The new norms will facilitate co-investment by accredited investors of a particular scheme of an AIF in unlisted securities of an investee company. A separate co-investment scheme will be launched for each co-investment in an investee company.
““SEBI’s approval of a dedicated co-investment vehicle (CIV) framework under the AIF regulations is a breakthrough reform. It streamlines how accredited investors—already participants in AIFs—can co-invest in high-conviction opportunities alongside fund managers, aligns India with global norms, and removes longstanding friction around such structures,” said Gopal Srinivasan, Chairman and Managing Director, TVS Capital Funds & Senior Board Member, IVCA.
“This will further increase the flow of private--especially domestic capital--to entrepreneurial and growth businesses. By limiting CIVs to accredited investors, SEBI has also signalled a shift toward more principle-based, lighter-touch regulation for qualified participants,” he added.