Asset managers, who were supposed to be on the road during this time, have pushed their plans to the end of the year, said Singh. “Investors who want to write a larger cheque are hesitant to commit as they cannot meet managers face to face. Others are backing off from their earlier commitments, delaying fund closure.”
Asset managers have the discretion to extend the fund-closing period, but need two-thirds majority approval from investors for up to two years from the end of the term. The decision has to be then intimated to the regulator.
A section of the industry had made representations to Sebi, seeking a mandatory extension for all those funds in the final stage of closing, and which have an extension clause in their PPM.
“New funds are generally open for fundraising for a certain period and some of them could be closing during the current lockdown. Given the current situation and the liquidity crisis being faced across the segments, such funds would want to extend the closing of the fund by three to six months. While the closing is governed by the terms of PPM, the industry was expecting clarity on whether to treat this as a material and reportable change," said Sunil Gidwani, partner, Nangia Andersen.
He added it has been cumbersome for funds to reach out individually to investors and get their consent, and it would be better if Sebi gave blanket approval to all funds depending on the extension period specified in the PPM.
Sebi had recently extended compliance test and reporting timelines for AIFs, but was silent on the issue of extending fundraising timelines.
AIFs are privately pooled investment vehicles, which collect funds from sophisticated investors, whether Indian or foreign. Investments by AIFs had risen to Rs 1.4 trillion for the quarter ended December 2019, clocking a 53 per cent rise in assets over the year-ago period.