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Sebi amends rules governing alternative investment funds

Capital markets regulator Sebi has amended the rules pertaining to investment aspects of certain category of alternative investment funds (AIFs). Under the rules, Category III AIFs can invest not more than 10 per cent of the investable funds in an investee company, directly or through investment in units of other AIFs, Sebi said in a notification on Wednesday.

Various types of funds such as hedge funds, PIPE Funds, etc. are registered as Category III AIFs. Further, the large value funds for accredited investors of Category III AIFs can invest up to 20 per cent of the investable funds in an investee company, directly or through investment in units of other AIFs.

This is provided that for investment in listed equity of an investee company, Category III AIFs may calculate the investment limit of 10 per cent of either the investable funds or the net asset value of the scheme, while large value funds for accredited investors of Category III AIFs may calculate the investment limit of 20 per cent of either the investable funds or the net asset value of the scheme.

The new norms called Sebi’s AIF Regulations, 2022 became effective from Wednesday. In November 2021, the regulator allowed category III AIFs, including large value funds for accredited investors of Category III AIFs, to calculate the concentration norm based on net asset value (NAV) of the fund for investment in listed equity of an investee company.

AIFs, in market parlance, refers to a privately pooled investment vehicle which collects funds from investors whether Indian or foreign for investing these funds in India. Broadly, the AIF rules govern venture capital funds, private equity funds, SME funds, hedge funds among others.

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Rupee likely to appreciate on weak dollar, optimistic sentiments; USDINR pair to trade in this range

The Indian Rupee is expected to appreciate on Tuesday amid weakness in the dollar, optimistic sentiments in the domestic markets. However, expectations of higher PPI data from the US is expected to provide some support to the dollar. “US$INR (March) is likely to move towards 76.30 for the day,” said ICICI Direct. Rupee inched slightly lower on Monday against the US Dollar. At the interbank foreign exchange market, the local unit opened at 76.63 against the greenback. During the day, it swung between 76.52 and 76.69 before finally settling at 76.55, down 11 paise from previous close.

Rahul Kalantri, VP Commodities, Mehta Equities Ltd.
“USDINR 29 March futures contract traded steady on Monday. On daily technical chart, we observed that a pair is trading above its trend line resistance but facing resistance at higher levels. Looking at the technical set-up, a pair could face steep resistance around 76.8500 levels. We have suggested sell on jump should be preferred Strategy in the pair around 76.85-77.10. We suggest to stay away in today’s session ahead of the FOMC meeting.”

Gaurang Somaiya, Forex & Bullion Analyst, Motilal Oswal Financial Services
“Rupee traded in a narrow range for the third successive session but losses for the currency were limited as uncertainty between Russia and Ukraine recedes. Also, global crude oil prices retraced from higher levels and that too supported the rupee. In the next couple of sessions, volatility could drop ahead of the important FOMC policy statement that is scheduled to release tomorrow midnight. Hawkish commentary from the Fed Chairman is likely to extend gains for the dollar. Today, focus will be on the employment number that will be released from the UK and weak number could keep the currency weighed down against the US dollar. We expect the USDINR(Spot) to trade with a positive bias and quote in the range of 76.40 and 77.20.”

Heena Naik, Research Analyst – Currency, Angel One Ltd.
“In Monday’s session, the Indian Rupee made a weak opening at 76.62 levels from its previous closing levels of 76.59 levels. Throughout the day it traded in a tight range between 76.52 to 76.69 levels. In the upcoming session, the performance of USDINR is going to be lull again. Crude prices have cooled off quite a bit from the highs, but still, remain uncomfortably high as trade negotiations between the EU, US and Iran go on-off giving a ray of hope to the markets considering the Russian oil ban. The RBI will probably intervene intermittently to keep speculation and volatility in check, but it is unlikely to be too averse to the rupee’s decline in the face of an overall selloff in EM currencies.”

Tapish Pandey, Research Analyst, SMC Global Securities Ltd.
“The Indian rupee likely to trade mixed note as Oil extended losses following another volatile session after a cease-fire in Ukraine was discussed, while there were also concerns about crude demand in China due to a resurgence of Covid-19 there. Dollar rupee is facing resistance of its record high near 77.33 future levels sustain above which may head higher towards 78 marks while on flip side support is placed near 76.35 followed by 76.00 levels. Considering current trading setup and global sentiments buying to dips near support levels will be better strategy while keeping stop loss below 76.00 near month levels.”

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SEBI releases list of untraceable defaulters

Capital markets regulator Sebi on Monday released a list of nine individual defaulters who are untraceable.

The Securities and Exchange Board of India (Sebi) said even though recovery certificates were drawn up against nine individuals by the recovery officer, these notices could not be served on the defaulters at their last known addresses. These notices were issued from June 2014 to November 2021, according to a notice.

The recovery proceedings are initiated against the defaulters, who failed to return the investors’ money or failed to pay fines imposed on them by the regulator for various unlawful acts related to the securities market.

Those named by Sebi are — Rajnish Bhanwarlal Jain, Prashant Mulekar, Suleman Sadru Merchant, Naresh Shah, Kaushik Karsanbhai Patel, Varsha Madhusuan Satpalkar & Janardan Arvind Parulekar, Sudhir Nathuram Pawar & Somit Kishanchandra Saxena, Rajnee Rajan Gitaye and Girish Srichand Valecha & Nagma Husain Ahmed Ansari.

In the notice, the regulator has asked these defaulters to contact Sebi’s recovery officer by sending a letter or an e-mail by March 29, 2022.

“Further, if any person is aware of the whereabouts of the defaulter(s) detail of the same may be provided by sending a letter to the recovery officer by March 29, 2022”, it added.

Sebi has powers to recover money from various entities by way of passing orders for a refund of money to investors, disgorgement of funds to be distributed to investors, and also collecting fees and penalties levied by it. Since getting the recovery powers in 2013, Sebi has initiated recovery proceedings against a large number of defaulters.

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LIC IPO details: Govt to notify price band, number of shares, discount, more in final SEBI filing soon

The government is planning to soon file the final papers for LIC IPO with market regulator Sebi, which will provide details about the price band, discount for policyholders and retail buyers, and the actual number of shares to be put on the block, an official said.

The government is presently in the wait-and-watch mode because of the market volatility induced by the Russia-Ukraine war and will decide on the timing of the initial public offering (IPO) of Life Insurance Corporation (LIC).

“We have got the approval of the DRHP and the next step would be to file the RHP, which will give details of the price band and the actual number of shares. We are watching the situation, and soon we will take a call on the timing of the share sale,” an official told PTI.

LIC had, on February 13, filed the draft red herring prospectus (DRHP) for LIC IPO. Earlier this week, Sebi gave approval to the draft papers, paving the way for the share sale.

The government was expecting to garner over Rs 60,000 crore by selling about 31.6 crore or 5 per cent shares in the life insurance firm to meet the curtailed disinvestment target of Rs 78,000 crore in the current fiscal.

In case the initial share sale does not happen by March, the government will miss its revised disinvestment target for the current fiscal by a wide margin.

As per the draft prospectus, LIC’s embedded value, which is a measure of the consolidated shareholders’ value in an insurance company, was pegged at about Rs 5.4 lakh crore as of September 30, 2021, by international actuarial firm Milliman Advisors.

Although the DRHP does not disclose the market valuation of LIC, as per industry standards it would be about 3 times the embedded value.

At a 5 per cent stake dilution, the LIC IPO would be the biggest ever in the history of the Indian stock market and once listed, its market valuation would be comparable to top companies like RIL and TCS.

The government, however, did not disclose in the DRHP the discount that will be given to policyholders or LIC employees in the public offering. As per norms, up to 5 per cent of issue size can be reserved for employees and up to 10 per cent for policyholders.

During the current financial year so far, Rs 12,423.67 crore has been obtained through OFS, employee OFS, strategic disinvestment and buyback.

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