Why India’s markets has so few accredited investors
₹1 crore. AI funds (large value investors with minimum capital commitment of ₹70 crore) enjoy the privilege of allocating a higher percentage of their assets under management (AUM) into individual companies within AIF category I & II (50%) and category III (20%), compared to regular investors who must adhere to a 25% and 10% allocation, respectively. AI funds benefit from an extended AIF life of more than 2 years, allowing for potentially longer-term investment horizons.
PMS investors also experience distinctions based on accreditation levels. Those falling under the accredited category come with a minimum ticket size below ₹50 lakh. PMS AI( investors with minimum capital of ₹10 crore) gain the advantage of placing 100% of their AUM in unlisted securities, fostering a more diversified portfolio compared to the 25% limit for regular investors with a ₹50 lakh minimum ticket size.
It seems like Sebi’s accreditation criteria inadvertently or knowingly creates a tiered system, establishing a sort of ‘super AI class’ for investors with significantly higher capital commitments. These distinctions in criteria for larger investors—like AI funds with minimum capital commitments of ₹70 crore in AIFs and PMS AI investors with ₹10 crore—grant them substantial relaxations and advantages. Investors collaborating with investment advisers witness variations in fee structures based on their accreditation status.
While fee negotiations remain bilateral for both categories, AIs may have a more flexible fee arrangement. Conversely, regular investors face a capped fee structure, limited to a maximum of 2.5% of assets under advice or ₹1.25 lakh. Moreover, the IFSCA (Fund Management) Regulations of 2022 offer additional flexibilities
. Read more on livemint.com
