Mumbai: A panel formed by India’s market regulator for dedicated infrastructure funds (DIFs) has recommended a close-end structure and an option to invest all their assets in unlisted securities for such funds.
The report, released by the Securities and Exchange Board of India late on Monday, said DIFs should operate as closed-end schemes with a maturity of seven years and the possibility of one or two extensions.
It said DIFs might be allowed to invest up to 100% of the assets in unlisted securities, while exposure to listed companies should be limited to 10% of their net asset value at the time of making the investments.
It has also recommended that given the log-term nature of such funds, investors should be given tax incentives and liquidity by allowing such funds a listing option.
Finance Minister P. Chidambaram in his budget speech for 2007-08 had proposed allowing mutual funds to launch DIFs in an effort to improve investment flow to the sector.
The committee was headed by U.K. Sinha, chairman and managing director, UTI Mutual Fund.
The other members of the committee were Milind Barve, managing director, HDFC Mutual Fund, S. Naganath, president, DSP Merrill Lynch Managers Ltd and P.K. Nagpal, executive director, Sebi.