Private Funds: SEBI introduces investor diligence requirements for AIFs

  • SEBI has cast new investor diligence obligations on AIF managers, which extends to underlying investors
  • As per the new rule, the manager of an AIF is not permitted to on-board new investors or draw down capital from existing investors unless the diligence conditions have been complied with…

    How to Negotiate Key Person Provisions – A Lawyer’s Guide

    • The occurrence of a key person event should not trigger a domino effect across other funds managed by the sponsor
    • The ‘time and attention’ requirement should be drafted so as to avoid inadvertent foot faults
    • The question of whether or not a key person event has occurred should not be the subject of a long-drawn determination process…

      What’s Holding Back Indian Fund Managers From Raising Global Capital?

      • Indian fund managers, thus far restricted, may now be able to setup India-focussed offshore funds
      • Is investment by resident individuals in offshore funds now restricted, even under LRS? Not quite – we address the ambiguity
      • Will GIFT now emerge as the most favoured jurisdiction for setup of India-focussed funds?…

        GP-Led Secondaries in India – Considerations and Challenges

        • GP-led secondaries have become fairly popular globally given that they solve for the liquidity concerns among some LPs whilst allowing the GP to capture more upside from an investment.

        • In a GP- led secondary deal, it is important to find a pricing that works for the exiting investors but keeps the acquisition attractive for the incoming investors…

          Private Funds: Corpus v Investible Funds – Need to reconsider SEBI’s penalty order?

          • SEBI has strictly construed the term ‘investible funds’ leaving no scope for commercial nuances.
          • SEBI rules that estimated expenditure cannot be offset against estimated income streams when calculating investible funds.
          • SEBI appears to be driven by the view that investors should not be over-concentrated in a single asset…

            Private Funds: SEBI holds AIF investors in breach of insider trading norms for AIF’s investments decisions

            • SEBI holds investors of AIFs having UPSI/ MNPI in breach of insider trading norms for investment decisions of AIFs
            • Investors into pooled investment vehicles exposed to substantial risk for actions beyond their control and visibility
            • Compliance seems rather impractical and creates complications for both the AIF and its investors – bad law that needs to studied for its potential implications…

              Private Funds: Six considerations when negotiating carry clawback provisions

              • Clawback liability must be ascertained with respect to each investor
              • Standalone clawback obligations may not be sufficient
              • The clawback provision should include a true-up mechanism for sponsors…

                GIFT City – Analysing New Fund Management Regulations and why GIFT City still doesn’t work

                • IFSCA proposes significant shift in regulatory regime for investments funds – shift from investment vehicle towards fund management entity (FME)
                • Replacement of Category I, II and III AIFs under present AIF Framework with investment
                  schemes viz. Venture Capital Scheme, Restricted Scheme (Non-Retail) and Retail Schemes…

                  SEBI formalises the use of co-investments but leaves some question marks?

                  • SEBI introduces a new co-investment framework permitting AIF investors to co-invest alongside the AIF through portfolio managers
                  • The new framework provides that co-investments cannot be on more favourable
                    terms than AIF investments

                  • Co-investments are not permitted in listed securities…

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