SEBI has today issued operating guidelines for alternative investment funds (AIFs) in international financial services centre (IFSC) in which it has allowed domestic fund managers or sponsors of AIFs to manage AIFs headquartered in IFSC.
This will help fund houses managing AIFs attract foreign investors since they want CIOs or star fund managers to manage their investments.
An IFSC is exempted from certain domestic law; instead, they follow international practices. IFSCs deals with flows of finance, financial products and services across borders. Companies setting up offices in IFSCs cannot deal in local currency. In addition, IFSCs can provide fund raising services for individuals, corporations and governments and wealth management services to foreign investors. In India, Gandhinagar has one IFSC called Gujarat International Finance Tec-City (GIFT).
SEBI clarified that each scheme of AIFs in IFSC will have to maintain a minimum corpus of $3million. Such fund managers will have to accept a minimum of $1,50,000.
Further, the market regulator said that fund managers should have continuing interest in the AIF. In fact, such managers will have to ensure that they keep 2.5% of the total corpus or $7,50,000, invested in the scheme, whichever is lower.