Sebi, the Securities and Exchange Board of India, has taken a significant stride to accelerate overseas investments by alternative investment funds (AIFs) and venture capital funds (VCFs). The duration of approval granted to these funds for foreign investments has been streamlined, now reduced from six months to a more efficient four months. This move is aimed at bolstering the optimal use of allocated limits and ensuring swift availability of untapped resources to the AIF industry.
In alignment with the recommendations of the Alternative Investments Policy Advisory Committee, Sebi released a circular on August 4, communicating the reduction of the time limit for overseas investments by AIFs and VCFs. This regulatory amendment is applicable to investment approvals granted after the circular’s issuance. Should these funds fail to invest within the revised time frame, the possibility of reallocating unutilized limits to other aspiring funds looms.
Previously, AIFs and VCFs were restricted to investing solely in companies tied to India. However, Sebi’s guidelines, introduced last August, broadened horizons by enabling these funds to also invest in foreign companies. The circular underscores the importance of AIFs and VCFs investing in overseas companies incorporated in nations whose securities market regulators are signatories to the International Organization of Securities Commission’s Multilateral Memorandum of Understanding (Appendix A Signatories) or have bilateral Memorandum of Understanding with SEBI.
This regulatory adjustment highlights Sebi’s commitment to streamlining the investment process for AIFs and VCFs, thus fostering effective resource allocation and facilitating prompt overseas investments. Consequently, this transition will substantially contribute to the growth and maturation of the alternative investment landscape in India.