HFCs could see some pressure to either divest or fully provide for some assets as some of them have investments in AIFs, and those funds have invested in real estate companies. "It may also significantly impact the existing investments from the likes of banks, NBFCs and Sidbi in several AIFs," said Tejesh Chitlangi, Senior Partner, IC Universal Legal.
"Sebi is looking to review the skin in the game rules after the mutual fund industry brought to its notice the operational issues in their implementing some of them," said the person cited above.
The Securities & Exchange Board of India (Sebi) on Monday asked the custodians of these funds to state the names of investee companies, quantum of each investment, investible surplus on the day of the investment, and whether the investee company is an associate of the fund, among other things.
The new rule allows such investments to be either sold to a new scheme of the same AIF - liquidation scheme or distributed in-specie to the investors of the original AIF. An in-specie distribution involves the distribution of the investments such as shares or other securities of the AIF to its investors, instead of returning their capital in the form of cash.