Informal Guidance on AIF investments

SEBI vide circular dated September 13, 2023 has issued Informal Guidance on Regulation
18 of Securities and Exchange Board of India (Alternative Investment Funds) Regulations, 2012
(“AIF Regulations”)

It is clarified that Category III AIFs may, inter alia:

  1. Invest in securities of listed or unlisted investee companies, derivatives, units of other AIFs or complex or structured products.
  2. Deal in goods received in delivery against physical settlement of commodity derivatives.
  3. Buy or sell credit default swaps in terms of the conditions as may be specified by the Board from time to time.
  4. Engage in leverage or borrow subject to consent from the investors in the fund and
    subject to a maximum limit, as may be specified by the Board.

Investment in Mutual Funds is not covered under permissible investments by a Category III AIF.