Sebi eases AIF rules, lowers minimum investment limit for LVFs.

Sebi proposes changes to AIF regulations, including lowering the minimum investment threshold for large value funds (LVFs) from ₹70 crore to ₹25 crore and exempting LVFs from mandatory annual audit requirements. The regulator also suggests a separate AIF scheme for accredited investors. The changes aim to broaden the investor base and facilitate improved fund raising for AIFs.

The Securities and Exchange Board of India (Sebi) has proposed substantial amendments to the regulations governing Alternative Investment Funds (AIFs), aiming to broaden investor participation and streamline compliance processes. The key changes include lowering the minimum investment threshold for large value funds (LVFs) and introducing a separate AIF scheme for accredited investors.

Sebi's consultation paper, issued on July 2, 2025, outlines a series of relaxations for LVFs, including a reduction in the minimum investment requirement from Rs 70 crore to Rs 25 crore [1]. This move is intended to attract more domestic institutional players and diversify the investor base. Additionally, LVFs will be exempted from several compliance requirements, such as the need to follow the standard template for private placement memoranda (PPM), mandatory annual audits of PPM terms, and the responsibility placed on investment committee members for approving fund decisions. The regulator also proposed waiving the NISM certification mandate for key investment team members of fund managers for LVF-only schemes and removing the cap of 1,000 investors per AIF scheme for LVFs.

Moreover, Sebi has proposed a separate AIF scheme that would admit only accredited investors, providing these schemes with a lighter regulatory framework [2]. The regulator has suggested a gradual transition from the traditional minimum commitment threshold to using only accreditation status as the metric for investor sophistication in AIFs. Accredited investor-only schemes will benefit from several relaxations, including differential rights, extended tenure, certification waiver, and no investor cap. This framework is designed to target sophisticated investors with higher risk appetites.

The proposed changes aim to facilitate improved fund-raising for AIFs and encourage long-term investments, particularly into unlisted securities. Sebi has invited stakeholders to submit their comments on these proposals until August 29, 2025.

References:
[1] https://m.economictimes.com/tech/technology/sebi-proposes-lower-entry-threshold-for-large-value-aifs-at-rs-25-crore/articleshow/123208408.cms
[2] https://www.business-standard.com/markets/news/sebi-proposes-new-lighter-touch-approach-for-accredited-investors-for-aifs-125080900384_1.html