Key Points
SEBI relaxes investment norms for Category II Alternative Investment Funds
Enables investments in A-rated or lower listed debt securities
Addresses market condition changes
Provides greater fund flexibility
This move is aimed at addressing changes in market conditions and ensuring that these funds have more investment opportunities.
In a statement issued after a board meeting, the SEBI said that such investments would be considered equivalent to investments in unlisted securities when determining compliance with minimum investment requirements.
"Investments of Category II AIFs in listed debt securities rated A or below will be treated as akin to investments in unlisted securities for the purpose of their compliance with minimum investment conditions in unlisted securities," the market regulator said.
Category II AIFs, which include private equity funds, debt funds, and infrastructure funds, are primarily meant to invest in unlisted securities and must allocate more than 50 per cent of their funds to such investments.
However, a recent amendment in the Listing Obligations and Disclosure Requirements (LODR) Rules reduced the availability of unlisted debt securities, limiting the investment scope for these funds.
To address this, the SEBI had proposed a change through a consultation paper on February 7, 2025.
The decision now allows these funds to invest in listed securities that carry a higher risk, provided they have a credit rating of 'A' or below.
This move is expected to offer greater flexibility to Category II AIFs while ensuring they continue to focus on securities with similar risk profiles.
Meanwhile, the market regulator last week said it has taken strict action against misleading content on social media, removing over 70,000 posts and accounts since October 2024.
This move is part of the SEBI's ongoing efforts to tackle misinformation and regulate online financial influencers.
The market regulator has been working closely with social media platforms to ensure such content does not mislead investors.
