The Securities and Exchange Board of India (SEBI) has laid out a new procedure for managing co-investment services through portfolio management route.
In its latest circular, India’s capital market regulator said that Alternative Investment Funds (AIF), who are also SEBI registered portfolio managers, will have to inform SEBI prior if they plan to provide co-investment services via portfolio management route.
It further said that other managers, who are not registered portfolio managers, will be required to register with SEBI as portfolio managers if they plan to offer co-investment services through portfolio management route.
Pursuant to approval, if any such portfolio manager wishes to offer portfolio management services (PMS) other than co-investment, it will be subject to compliance with all provisions of the PMS rules and SEBI’s prior clearance.
The regulator stated that the portfolio managers will have to submit a report in connection with their portfolio management activity on intermediaries portal within seven working days of the end of every month.
Additionally, portfolio managers will require to produce a report to their clients on a quarterly basis.
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Both these reports are required to be in the revised format, including details of co-investment provided by portfolio manager, starting from April 2022.
SEBI clarified that the provisions related to fees and charges as well as direct on-boarding of clients by portfolio managers stated under PMS regulations will not be applicable to co-investment services.
These provisions will remain the same for portfolio management services other than co-investment, stated the regulator.
Last month, SEBI amended rules for portfolio managers to facilitate co-investment by investors of AIF through the portfolio management route.