The markets regulator had allowed AIFs to invest up to 25% of their investable corpus (fund size minus expenses) overseas and created a $500 million allowance for overseas investments in 2015
Markets regulator Securities and Exchange Board of India (Sebi) on Friday raised overseas investment limit for alternative investment funds (AIFs) and venture capital funds (VCFs) from $750 million to $1.5 billion.
In 2015, Sebi had allowed AIFs to invest up to 25% of their investable corpus overseas, and had created a $500-million allowance for overseas investments, with a rider that such investments must have an Indian connection. Sebi had later increased it to $750 million in 2018.
“As the industry grew, the size of the previous allowance was becoming a bottleneck for Indian AIFs to invest overseas, with the allowance getting exhausted due to the sheer size of the industry and pace of investments. We’re thrilled to see this doubling of the overseas investment allowance to $1.5 billion, which will enable Indian AIFs to invest overseas and generate strong returns for their investors," said Siddarth Pai, founding partner, 3one4 Capital, an early-stage venture capital fund. “This will allow greater Indian participation in global companies and will accelerate growth of the Indian AIF industry overall."
As per estimates, the AIF industry has averaged a compounded annual growth rate of 491% between December 2012 and December 2020, to reach ₹4.42 trillion.