Sebi tweaks valuation framework for AIFs post suggestions from industry

The Securities and Exchange Board of India (Sebi) on Thursday modified its framework for the valuation of the investment portfolio of Alternative Investment Funds (AIFs) following suggestions from the industry.

The market regulator stated that a change in the valuation methodology or approaches will not be considered a material change but will have to be disclosed to investors to ensure transparency.

The regulator also included valuation guidelines endorsed by the AIF association for the valuation of assets on which there was ambiguity under the previous norms.

The AIF association IVCA had endorsed International Private Equity and Venture Capital Valuation Guidelines (IPEV) last year.

Further, on norms mandating valuation based on audited data, the AIF industry had raised concerns about the timelines. Sebi on Thursday extended the same from six months to seven months from March 31 of every year for reporting valuation based on the audited data of investee companies to the performance benchmarking agencies.

“With respect to thinly traded and non-traded securities, it is envisaged to harmonise the valuation norms across entities within Sebi’s regulatory purview in a time-bound manner so as to facilitate the applicability of the same for the valuation of investment portfolios of AIFs on or after March 31, 2025,” stated Sebi in the circular.