SEBI Proposes Co-Investment Vehicle Scheme for AIFs

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  • Last Updated on 13 May, 2025

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SEBI Co-Investment Vehicle

Consultation Paper; Dated: 09.05.2025

The Securities and Exchange Board of India (SEBI) has issued a consultation paper proposing key regulatory changes aimed at enhancing flexibility and investor participation in the Alternative Investment Fund (AIF) space. The two major proposals include the introduction of Co-Investment Vehicles (CIVs) and relaxation in norms governing advisory services by AIF managers.

1. Co-Investment Through CIVs – A Structured Opportunity

SEBI has proposed to enable AIFs to offer co-investment opportunities to their investors through a separate vehicle known as a Co-Investment Vehicle (CIV). This CIV would be structured as an independent scheme of the AIF, thereby providing a formal and regulated framework for such investments.

  • What is Co-Investment? – Co-investment refers to the opportunity offered to AIF investors to make additional investments in unlisted securities of the same investee company in which the AIF has already invested.
  • Purpose of CIVs – The objective is to provide AIF investors direct exposure to high-potential investments alongside the fund, but with clear segregation of assets, risks, and terms through a separately governed vehicle.

2. Regulatory Safeguards and Structural Requirements

The proposed CIV framework is expected to include –

  • Separate books of accounts and disclosures
  • Alignment with existing AIF regulations
  • Governance standards ensuring investor protection
  • These measures are aimed at ensuring transparency, avoiding conflict of interest, and aligning co-investor interests with those of the AIF.

3. Relaxation in Advisory Services Norms

In addition to the CIV proposal, SEBI has also suggested relaxing the current restrictions on AIF managers providing advisory services to offshore funds or entities.

  • The relaxation seeks to allow AIF managers to advise other investment funds or vehicles without stringent prior approval, subject to adherence to specific disclosure and compliance norms.
  • This move aims to encourage cross-border fund management capabilities and improve the global competitiveness of Indian fund managers.

4. Conclusion and Stakeholder Feedback

SEBI’s proposals are currently open for public comments. If implemented, these changes could provide greater investment flexibility, deepen the AIF ecosystem, and enhance India’s appeal as an investment hub.

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Author: Taxmann

Taxmann Publications has a dedicated in-house Research & Editorial Team. This team consists of a team of Chartered Accountants, Company Secretaries, and Lawyers. This team works under the guidance and supervision of editor-in-chief Mr Rakesh Bhargava.

The Research and Editorial Team is responsible for developing reliable and accurate content for the readers. The team follows the six-sigma approach to achieve the benchmark of zero error in its publications and research platforms. The team ensures that the following publication guidelines are thoroughly followed while developing the content:

  • The statutory material is obtained only from the authorized and reliable sources
  • All the latest developments in the judicial and legislative fields are covered
  • Prepare the analytical write-ups on current, controversial, and important issues to help the readers to understand the concept and its implications
  • Every content published by Taxmann is complete, accurate and lucid
  • All evidence-based statements are supported with proper reference to Section, Circular No., Notification No. or citations
  • The golden rules of grammar, style and consistency are thoroughly followed
  • Font and size that's easy to read and remain consistent across all imprint and digital publications are applied