Sebi lays the groundwork to undertake a co-investment portfolio management service


Capital markets regulator Sebi on Friday outlined the procedure for undertaking co-investment services through the portfolio management route.

This comes after Sebi last month changed the rules on portfolio managers to make it easier for investors to co-invest in Alternative Investment Funds (AIFs) through portfolio management.

In a circular, the regulator said that a manager of an AIF who is also a registered portfolio manager, and intends to offer co-investment services through portfolio management, does not. will do that after informing Sebi.

In addition, he stated that any other manager who is not a registered portfolio manager and wishes to offer co-investment services through portfolio management will have to apply for registration of Sebi as a portfolio manager. .

Following the granting of registration, if such a portfolio manager wishes to offer portfolio management services (PMS) other than co-investment, it will be subject to compliance with all provisions of the PMS rules. , including eligibility criteria, and prior authorization from Sebi.

Regarding periodic reports, the regulator said portfolio managers will have to submit a monthly report regarding their portfolio management activity, on the intermediary portal within seven working days of the end of each month.

This should be submitted according to the revised format, which includes the details of the co-investment proposed by the portfolio manager.

In addition, portfolio managers will be required to report to their clients on a quarterly basis, according to the revised format which includes details of the co-investment proposed by the portfolio manager.

The reporting requirements in the revised formats will be applicable for monthly reports to Sebi and quarterly reports to clients, from April 2022.

The regulator clarified that the provisions relating to fees and charges as well as the direct integration of clients by portfolio managers specified in the PMS rules will not be applicable to co-investment services.

These provisions will remain unchanged for portfolio management services other than co-investment, he added.

Under PMS regulations, no upfront fees will be charged by the portfolio managers, directly or indirectly, to clients.

In addition, the non-brokerage operating costs, in addition to the fees charged for the portfolio management service, will not exceed 0.50% per annum of the client’s daily average assets under management (AUM).

According to the rules, when integrating customers directly, no fees, except legal fees, will be levied.

(Only the title and image of this report may have been reworked by Business Standard staff; the rest of the content is automatically generated from a syndicated feed.)

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