High Net-Worth Investors may soon get easier access to exclusive AIF deals

Securities and Exchange Board of India (Sebi) has sought public comments till May 30 on the proposals.

If you’re a high-net-worth investor looking for access to exclusive startup deals without launching your own fund, market regulator Sebi's new proposal could change the game.

 

India’s market regulator, the Securities and Exchange Board of India (Sebi), has proposed new rules that would make it easier for investors in Alternative Investment Funds (AIFs) to participate in co-investment opportunities—potentially giving them access to high-growth, unlisted companies alongside the fund.

 

At the same time, Sebi is looking to lift the restriction that prevents AIF managers from offering investment advice on listed securities, allowing for more flexibility in how fund managers serve investors.

 

 

Let’s decode what this means, why it matters, and who stands to benefit.

 

First, What is Co-Investment?

• Co-investment, in AIF industry parlance, refers to the offering of the investment opportunity to the investors for additional investment in unlisted securities of an investee company, where an AIF is also making or has made the investment.
• Such investment opportunities are offered to investors who meet certain objective criteria, such as the size of the minimum commitment and strategic value of the investor, among others.
• In simple terms, co-investment lets you invest directly into a company your AIF is already investing in.

 

Say your AIF is investing Rs 20 crore into a fast-growing private tech firm. With co-investment rights, you may be offered the opportunity to invest Rs 5–10 lakh (or more) directly into the same deal—often on the same terms, but without paying the fund’s management fee or carried interest.

 

Why is this appealing?

• Lower fees
• Same access to high-potential deals
• More control over your exposure
• Diversification within your AIF commitments
• Until now, this process lacked formal structure. SEBI wants to fix that by introducing a regulated co-investment model.

 

Introducing CIVs: A new way to co-invest

Sebi proposes creating a Co-Investment Vehicle (CIV)—a separate investment scheme under an existing AIF specifically designed to hold co-investments.

 

Here’s how it would work:

• Separate Scheme (CIV): Keeps co-investments distinct from the AIF’s main fund
• One CIV per company: Makes tracking and compliance easier
• Available only to accredited investors: Ensures only financially sophisticated investors participate
• Direct investment in unlisted companies: Opens access to exclusive private equity-type deals
• Exempt from some AIF rules: Offers greater flexibility in structure and terms

 

Every time the AIF wants to offer co-investment into a new company, it must launch a separate CIV scheme, and inform SEBI.

Why?

For clarity and transparency.

Each CIV will be tied to only one company, so investors know exactly what they are co-investing in.

 

 Each CIV must have its own bank account, demat account, and PAN

This ensures:

Proper tracking of funds

No co-mingling of assets

Transparency and accountability

 

CIV co-investments are only for accredited investors

Only financially sophisticated investors (as defined by SEBI rules) can participate in these CIVs. This protects retail investors from risky, complex deals.

 

These vehicles would be exempt from diversification rules, tenure restrictions, and sponsor capital commitments—giving fund managers and investors more room to structure deals efficiently.

 

In simple terms:

SEBI wants to allow AIFs to create mini-schemes (CIVs) for specific co-investment deals, but:

They must disclose upfront how they’ll do it (via shelf PPM)

Launch a separate scheme for each company

Keep accounts separate and transparent

Allow only accredited investors

Be lightly regulated but well-monitored to avoid misuse

 

What else is Sebi proposing? 

SEBI is also proposing to remove restrictions on AIF managers offering advice on listed securities. That means a fund manager could, in the future, help you manage both your private and public equity portfolios under one roof—a move that streamlines investment management for HNIs and family offices.