The Securities and Exchange Board of India (SEBI) has introduced a liquidation scheme for alternative investment funds (AIFs), which provides an additional way for managers and investors to generate the highest value for investments that are unliquidated. AIFs can deal with investments that have not been sold due to a lack of liquidity during the winding-up process, and sell them to a new scheme of the same AIF, or distribute in-specie to investors of the fund. Following the announcement, Dipen Ruparelia, Head of Products, Vivriti Asset Management, welcomed the regulatory changes and said the long-term positives for corporate governance in the debt and AIF industries will go a long way towards investors’ confidence in the AIF. Nevertheless, Punit Shah, Partner, Dhruva Advisors, stated that certain aspects of the new scheme lack clarity, including the benefits to schemes that have surpassed their tenure, and the tax implications that could arise from the transfer of unliquidated assets by the original scheme in exchange for units of the liquidation scheme.
Maximizing the Value of Unliquidated Investments: Experts Recommend Liquidation Scheme for AIFs
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