Sebi clears faster launch path for AIF schemes with 30-day fast track

MUMBAI: The Securities and Exchange Board of India (Sebi) has eased the approval process for alternative investment funds (AIFs), allowing managers to launch schemes faster and deploy capital more efficiently.

In a circular issued Thursday, the regulator introduced a 30-day fast-track route for AIFs launching new schemes. Managers can proceed with launches and circulate private placement memoranda (PPMs) to investors 30 days after filing an application with Sebi, unless the regulator intervenes.

For first-time schemes, launches can begin after Sebi registration or the completion of the 30-day period from filing, whichever is later. Any regulatory comments issued during this window must be incorporated before launch, retaining a layer of oversight without requiring explicit approval.

A PPM is a disclosure document outlining an AIF’s strategy, risks, terms and management to help investors make informed decisions.

Currently, Sebi reviews disclosures in the PPM and related documents, including the Merchant Banker Due Diligence Certificate, and provides comments. AIFs or their merchant bankers must then revise and resubmit these documents, a process that can delay launches and capital deployment.

The changes signal Sebi’s confidence in the maturing AIF ecosystem, citing the sophistication of investors and the due diligence capabilities of registered merchant bankers.

“This was a long pending move as the flow of money into AIFs has also increased. Now, there are about 35 applications every month with Sebi. With this move, one doesn’t have to wait indefinitely for approval. It also puts more onus on the fund manager and merchant banker to ensure they comply by disclosure norms,” said Dharmesh Trivedi, founder of Dharmesh L Trivedi & Co. and the promoter and director of AIF CFO Association.

At the same time, the regulator has tightened accountability. Merchant bankers and AIF managers will be directly responsible for the accuracy, completeness and fairness of disclosures in PPMs, as well as accompanying declarations.

Filing requirements remain extensive. PPMs must be submitted through Sebi’s intermediary portal along with due diligence certificates, fit-and-proper declarations, commitment disclosures, and identification documents of key entities and personnel.

A standardized disclaimer will also be mandatory, clarifying that while merchant bankers independently verify disclosures, Sebi does not approve the contents of the PPM just because it has been submitted.

Separately, Sebi has capped the timeline for achieving first close at 12 months from the date a scheme becomes eligible to launch, tightening fundraising discipline under the faster approval regime.

The rules take effect immediately and apply to all AIFs except large value funds for accredited investors.