Standardised approach to valuation of investment portfolio of Alternative Investment Funds (AIFs)
Summary
This circular establishes a standardized approach for the valuation of investment portfolios by Alternative Investment Funds (AIFs) in compliance with amended AIF Regulations. It mandates specific valuation methodologies based on existing Mutual Fund norms or industry association guidelines and outlines the manager's responsibility for ensuring true and fair valuations. Additionally, it defines eligibility criteria for independent valuers and sets reporting obligations to performance benchmarking agencies.
Text
Valuation of securities for which valuation norms have already been prescribed under SEBI (Mutual Funds) Regulations, 1996 shall be carried out as per the norms prescribed under MF Regulations.
Valuation of securities not covered in para 3.1 shall be carried out as per valuation guidelines endorsed by any AIF industry association representing at least 33% of SEBI registered AIFs.
The manager shall disclose in PPM the details of the valuation methodology and approach adopted under the stipulated guidelines for each asset class of the scheme of the AIF.
The Manager and key management personnel shall ensure that the independent valuer computes and carries out valuation of the investments in the manner specified by the Board.
Manager shall be responsible for true and fair valuation; if established policies do not result in fair value, the Manager shall deviate from them and document the rationale.
If there is a deviation of more than 20% between consecutive valuations or 33% in a financial year, the manager shall inform investors of the reasons/factors.
Any change in valuation methodology shall be construed as a material change influencing investor decisions, requiring adherence to processes in SEBI Circulars CIR/IMD/DF/14/2014 and CIR/IMD/DF/16/2014.
The manager shall disclose details of changes in valuation methodology, accounting practices, and their impact on valuation as part of annual PPM submissions.
The Manager shall ensure that the AIF appoints an independent valuer satisfying criteria specified by SEBI from time to time.
The independent valuer shall not be an associate of manager or sponsor or trustee of the AIF.
The independent valuer shall have at least three years of experience in valuation of unlisted securities.
The independent valuer must be registered with IBBI and hold membership of specified professional institutes, or be a holding/subsidiary of a SEBI-registered Credit Rating Agency.
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Source: SecMarx — Standardised approach to valuation of investment portfolio of Alternative Investment Funds (AIFs). Verbatim text is public record; SecMarx structuring (linkage to applying orders) is cited to us.