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Corporate Laws Central Ministry of Finance Securities and Exchange Board of India Act, 1992

Framework for AIFs to make co-investment within the AIF structure under SEBI (Alternative Investment Funds) Regulations, 2012

09-Sep-2025 | SEBI/HO/AFD/AFD-POD-1/P/CIR/2025/126

SEBI has issued a circular regarding the framework for AIFs to make co-investment within the AIF structure under SEBI (Alternative Investment Funds) Regulations, 2012.

This circular has been issued in reference to Regulation 17A(7) of the Securities and Exchange Board of India (Alternative Investment Funds) Regulations, 2012 which specifies that the co-investment through a co-investment scheme ('CIV scheme') shall be carried out by manager of Category I or Category II AIFs in the manner and subject to the conditions as may be specified by the Board from time to time.

By virtue of this circular, SEBI has issued the operational modalities for carrying out the co-investment through a CIV scheme. Few of them are listed below:
1. Managers of AIFs shall make co-investment for an investor in an investee company either through PMS route or CIV scheme route.
2. Each CIV scheme shall have a separate bank account and demat account and assets of each CIV scheme shall be ring-fenced from assets of the other schemes.
3. CIV Scheme shall not borrow funds directly or indirectly or engage in any kind of leverage.
4. In case an investor of a scheme of an AIF excused/ excluded or has defaulted in contributing to the investment made in an investee company by such scheme of AIF, such investor shall not be allowed to co-invest in the said investee company.

Kindly refer to the attached document for more information.

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