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SEBI’s New Consultation Paper: A Step Towards Flexible Co-Investment Models for AIFs

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    The recent consultation paper by SEBI proposing changes to the co-investment framework for Category I & II intends to allow creation of a Co-Investment Vehicle (CIV), which would allow AIFs to offer co-investment opportunities to accredited investors in unlisted securities via a separate scheme under the AIF structure.

    Key Takeaways:

    • A separate CIV scheme will need to be launched for each co-investment in an investee company, with prior intimation to SEBI, in accordance with the shelf PPM for CIV schemes filed with SEBI at the time of registration. Each CIV will require separate bank accounts, demat accounts, and a PAN.
    • CIVs will have the flexibility to invest up to 100% of their corpus in a single portfolio. Co-investment opportunities can only be provided to investors of the AIF who are Accredited Investors.
    • Exit timing to be co-terminus for the AIF and CIV.

    While the proposed changes could lead to more agile and competitive AIFs, it’s crucial that the regulatory framework remains streamlined and doesn’t introduce unnecessary complexity into the co-investment process. In light of this, SEBI has invited industry feedback on the consultation paper.

    Reach out at priya.k@treelife.in for a discussion.

    About the Author
    Priya Kapasi Shah
    Priya Kapasi Shah
    Associate Partner | Tax & Regulatory | priya.k@treelife.in

    Heads Treelife’s Financial Advisory practice, specializing in investment structuring, cross-border transactions, and tax and regulatory advisory. Also leads on AIF setups and advisory services for GIFT IFSC.

    We Are Problem Solvers. And Take Accountability.

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