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Venture capital funds (VCF) and alternative investment funds (AIF) can now invest up to 25 per cent of their investible funds in offshore venture capital undertakings which have an Indian connection, said SEBI in a circular on Thursday. As of August 31, there are 165 AIFs registered with SEBI.
An offshore venture capital undertaking is a foreign company whose shares are not listed on any of the stock exchanges in India or abroad.
Earlier, VCFs were allowed to invest only up to 10 per cent of their investible funds in offshore VC undertakings with an Indian connection. Since May 2012, venture capital funds in India are governed by SEBI’s AIF regulations. However, investments in joint ventures / wholly owned subsidiaries have been forbidden.
Increased interestSEBI said there has been, in recent times, an increased interest of Indian entrepreneurs outside India. Many Indian entrepreneurs have been setting up their headquarters outside India with back-end operations and/ or research and development being undertaken in India. Therefore, there is a need to allow higher overseas investments by VCFs beyond the existing 10 per cent limit, the regulator added. For example, IIFL Venture Fund of IIFL Group can invest in offshore VC undertakings which have an Indian connection.
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