SEBI Prescribes Standardised Approach to Valuation of Investment Portfolio of AIFs

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SEBI Prescribes Standardised Approach to Valuation of Investment Portfolio of AIFs June 21, 2023

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SEBI, vide its circular dated June 21, 2023, has proposed that AIFs must adopt a standardized methodology for valuation of investment portfolios managed by them.

Through this circular, which will be effective from November 1, 2023, SEBI has specified that:

the valuation of securities for which valuation norms have been prescribed under SEBI (Mutual Funds) Regulations, 1996 (“MF Regulations”) must be carried out as per MF Regulations;
the valuation of securities for which no valuation norms have been prescribed under MF Regulations shall be carried out as per valuation guidelines endorsed by an AIF industry association, which in terms of membership must represent at least 33% of the number of SEBI registered AIFs; and
the manager shall also disclose in PPM, the details (including any change and its impact) of the valuation methodology and approach adopted under the stipulated guidelines for each asset class of the scheme of AIF. Any change in the methodology and approach for valuation of investments of scheme of AIF shall be construed as material change significantly influencing the decisions of the investor to continue to be invested in the scheme of AIF and accordingly relevant procedure prescribed by SEBI must be adhered to.

This circular also provides the eligibility criteria for independent valuer and standards for reporting valuation of investments of AIF to performance benchmarking agencies.

To read the circular click here

For any clarification, please write to:

Mr. Yatin Narang
Partner
[email protected]

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