• SEBI has issued operational guidelines for co-investments by limited partners (LPs) in Category-I and Category-II Alternative Investment Funds (AIFs) to prevent misuse for gaining indirect control of portfolio companies. These guidelines follow SEBI's recent overhaul of rules allowing LPs to directly participate in private market deals through co-investment schemes.
• The guidelines limit the co-investment amount an LP can make in a portfolio company through co-investment vehicles (CIVs) to a maximum of three times their holding in the same company through the AIF's larger scheme. This limit aims to prevent investors from using CIVs to conceal control of an entity.
• The co-investment limits do not apply to multilateral or bilateral development financial institutions (DFIs), state industrial development corporations, and entities established or owned/controlled by domestic or foreign governments, including central banks and sovereign wealth funds. This exemption allows these entities greater flexibility in their co-investment activities.
• Fund managers are responsible for ensuring CIVs are not used to hide control of an entity and that co-investments do not circumvent regulatory disclosure requirements or allow investments that LPs could not make directly. SEBI may also set implementation standards for CIV schemes in consultation with industry associations to ensure investments are made for legitimate purposes.

Asha Menon

The Securities and Exchange Board of India (SEBI) has set limits and restrictions to ensure that co-investments by limited partners (LPs) to private equity, venture capital and other alternative investment funds (AIFs) are not misused to gain indirect control of portfolio companies.

The capital markets regulator on Tuesday released the operational guidelines for co-investments ......

SEBI sets limits on LP co-investments to prevent indirect control of portfolio firms

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The Securities and Exchange Board of India (SEBI) has set limits and restrictions to ensure that co-investments by limited partners (LPs) to&nbsp;private...

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SEBI sets limits on LP co-investments to prevent indirect control of portfolio firms

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