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SEBI has imposed a fine of Rs. 10 lakh on Indgrowth Capital Advisors for exceeding the ‘per company’ investment limit and reporting incorrect ‘investable corpus’ to the regulator.
According to SEBI, the AIF had invested more than 10% of its investable corpus in Ugro Capital in 2019. In addition, the company had submitted two different figures of its investable fund at Rs. 429 crore and Rs. 457 crore, respectively on February 3, 2020 and February 5, 2020.
"Examination team observed that Indgrowth AIF had actively breached the permissible investment limit of 10% of investable funds while investing in the shares of Ugro Capital and Indgrowth AIF was reporting the incorrect amount of investable funds to SEBI, in its quarterly reports," the regulator said in the order.
In its defence, the AIF had said that both the mistakes were a result of error in calculation of 'investable corpus'. The AIF had arrived at the corpus by deducting the expenditure against returns from 'parked investments' instead of subtracting from the corpus directly. As a result, the 'investible corpus’ according to the AIF was higher compared to what it would be when calculated in the right process.
However, SEBI didn't see merit in the defence. "The Noticee has only tried to maximise its “investable funds” and has adopted a convenient method to do so, disregarding the mandate in the AIF Regulations," the order stated.