Key Takeaways
- • SEBI raised the overseas investment limit for Alternative Investment Funds (AIFs) and Venture Capital Funds (VCFs) to $750 million, up from $500 million.
- • The change was made in consultation with the Reserve Bank of India and issued through a SEBI circular.
- • Funds must disclose utilisation of their overseas limits within five working days on SEBI's intermediary portal.
- • Unused limits and voluntary surrenders must be reported within two working days of the relevant expiry or decision, with a six-month validity period from SEBI's approval.
Summary
India's markets regulator, the Securities and Exchange Board of India (SEBI), has increased the overseas investment limit for Alternative Investment Funds (AIFs) and Venture Capital Funds (VCFs) to $750 million from $500 million, according to a circular issued on July 3, 2018. The decision was taken in consultation with the Reserve Bank of India (RBI). The $500 million cap had been in place since October 2015, when SEBI first permitted AIFs and VCFs to invest overseas.
AIFs are funds established or incorporated in India that pool capital from Indian and foreign investors for investment under a predetermined policy. VCFs manage investor money for private equity stakes in startups. Both fund types are now permitted to deploy a larger share of their capital outside India under the revised cap.
To monitor how the limits are used, SEBI has made disclosure mandatory. AIFs and VCFs must report any utilisation of their overseas limits within five working days of the usage, through SEBI's intermediary portal. Each overseas limit approval carries a validity period of six months from SEBI's approval. If a fund does not use part or all of its limit within that window, it must report the unused amount within two working days of expiry. A fund that wishes to surrender its limit before the validity period ends must report the surrender within two working days of the decision.
AIFs are funds established or incorporated in India that pool capital from Indian and foreign investors for investment under a predetermined policy. VCFs manage investor money for private equity stakes in startups. Both fund types are now permitted to deploy a larger share of their capital outside India under the revised cap.
To monitor how the limits are used, SEBI has made disclosure mandatory. AIFs and VCFs must report any utilisation of their overseas limits within five working days of the usage, through SEBI's intermediary portal. Each overseas limit approval carries a validity period of six months from SEBI's approval. If a fund does not use part or all of its limit within that window, it must report the unused amount within two working days of expiry. A fund that wishes to surrender its limit before the validity period ends must report the surrender within two working days of the decision.
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