Source: Mint
Context:
On 8 December 2025, the Securities and Exchange Board of India (SEBI) issued a circular formalising the process for existing Alternative Investment Funds (AIFs) to convert into Accredited Investor-only funds (AI-only funds) or Large Value Funds (LVFs). The move follows amendments to the SEBI (AIF) Regulations, 2012, notified on 19 November 2025.
Key Highlights of the Circular:
- Conversion & Launch: Existing AIFs can convert schemes into AI-only or LVF schemes; new schemes can be launched under these categories.
- Naming Requirement: All schemes must explicitly include ‘AI-only fund’ or ‘LVF’ in their name.
- Investor Consent: Existing schemes must obtain consent from all investors to migrate.
- Effective Date: Immediate; mandatory for all fresh launches and conversions.
About LVFs and AI-only Funds:
- Accredited Investor (AI) Status: Investors must qualify as accredited at onboarding; once accredited, status remains for the life of the scheme even if criteria are later lost.
- LVF Specifics:
- Minimum investment: ₹25 crore
- Lightened regulatory requirements and greater operational flexibility compared to regular AIFs
- Exempt from standard placement memorandum template
- Exempt from annual audit of placement memorandum
- No investor waiver required for these exemptions
- Operational Cap: Maximum scheme extension for AI-only funds and LVFs is five years, including prior extensions.
Significance:
- Provides regulatory sandbox for AIFs to experiment with new fund structures.
- Enhances operational flexibility for large and sophisticated investors.
- Encourages accreditation and investor sophistication in the AIF ecosystem.
- Reduces delays in fund placement and audit processes, especially for high-value funds.
