Investcorp Real Estate, 6 others settle AIF rule violation case with Sebi

Investcorp Real Estate Yield Fund and six others have settled with markets regulator Sebi a case of flouting Alternate Investment Funds (AIF) rules on payment of Rs 25.5 lakh towards settlement amount.

Apart from Investcorp Real Estate Yield Fund, Investcorp India Asset Managers, Ajay Kumar, Niraj Sirsalewal, Ritesh Vohra, Gaurav Sharma and IDBI Trusteeship Services Ltd have settled the case.

The order came after the entities filed applications proposing to settle the proceedings that may be initiated against them for the violation of the provisions of the AIF Regulations, through a settlement order and remitted Rs 25.50 lakh.

In its settlement order passed on Friday, Sebi said the "specified proceedings, in respect of which the notice was issued, are hereby settled in respect of the applicants".

While examining the matter, Sebi observed that the tenure of the Investcorp Real Estate Yield Fund had been extended beyond 2 years and that its investments had not been liquidated within the timelines as specified in the Sebi's AIF rules by the AIF, manager, key managerial personnel and trustee resulting in the violation of the provisions of AIF Regulations and Code of Conduct specified in the AIF Regulations, the order mentioned.

The Trustee in November 2022 informed Sebi about the initiation of the winding up of the Fund.

As per the AIF Regulations (before the amendment dated June 15, 2023) the AIF scheme is required to liquidate all its assets within one year from the date of the intimation by the Trustee to Sebi about the circumstances leading to the winding up of the AIF. Further, as per the Trust Deed, the Trustee or duly appointed liquidator is required to liquidate and distribute the assets of the Fund within 12 months from the date of the termination.

However, the disinvestment was completed only on July 6, 2024 -- more than 1.5 years after the date of the intimation, the order noted.