Sebi fines 2 entities Rs 30 lakh for violating AIF norms

Markets regulator Sebi today slapped a fine of Rs 30 lakh on Srei Alternative Investment Managers Ltd (SAIML) and Srei Multiple Asset Investment Trust for violating rules pertaining to alternative investment fund.
SAIML is the fund management arm of Srei Infrastructure Finance.
Sebi noted that SAIML, sponsor of the fund -- Srei Multiple Asset Investment Trust (SMIT)-- failed to have a minimum required continuing interest in the fund in the form of capital commitment and thereby violated AIF Regulations.
The sponsor's initial contribution before June 29, 2015 was Rs 5 crore in India Growth Opportunities Fund (IGOF), however, after June 30, 2015, it was reduced to Rs 3.13 crore.

Since, the money raised by the fund was Rs 790 crore, hence, the money contributed by the sponsor should have been at least Rs 5 crore. However, it failed in maintaining the required interest.
Under AIF Regulations, the manager or sponsor is required to have at least two and half per cent of the corpus or Rs 5 crore, whichever is lower, in the form of investment.

Besides, Sebi noted that the fund invested Rs 299 crore in Loop Mobile Holding India Ltd, which is 35 per cent of total investible corpus. Further, Rs 222 crore was invested in Essar Projects India Ltd, which is 26 per cent of investible corpus in violation of the norm.

AIFs cannot invest more than 25 per cent of the investible funds in one investee company under the regulation.
Further, the regulator said that the fund has given loan of Rs 299 crore and Rs 222 crore to Loop Mobile and Essar Projects, respectively, against the limit specified in the private placement memorandum.
Accordingly, the Securities and Exchange Board of India (Sebi) has imposed a total penalty of Rs 30 lakh on Srei Multiple Asset Investment Trust and Srei Alternative Investment Managers.