SEBI/HO/AFD/AFD - POD - 1/P/CIR/2025/126 — THE SECURITIES AND EXCHANGE BOARD OF INDIA ACT, 1992

CIRCULAR SEBI/HO/AFD/AFD - POD - 1/P/CIR/2025/126 September 09 , 2025 To, All Alternative Investment Funds (AIFs) Sir/Madam, Sub: Framework for AIFs to make co -investment within the AIF structure under SEBI (Alternative Investment Funds) Regulations, 2012 With an objective to enhance ease of doing business for Alternative Investment Funds ("AIFs"), Securities and Exchange Board of India (Alternative Investment Funds) Regulations, 2012 ('AIF Regulations'), have been amended and notified on September 09, 2025 to permit Category I and Category II AIFs to offer coinvestment facility to accredited investors by launching a separate co-investment scheme ("CIV scheme") within AIF Regulations. This is in addition to the coinvestment currently being facilitated to investors of AIFs through Co-investment Portfolio Managers under SEBI (Portfolio Managers) Regulations, 2020 ("PMS route"). In terms of sub -regulation 7 of regulation 17A of AIF Regulations, co-investment through a CIV scheme shall be carried out by manager of Category I or Category II AIFs in the manner and subject to the conditions as may be specified by the Board from time to time. In this regard, below mentioned operational modalities are being specified by this circular: 2.1. Managers of AIFs shall make co-investment for an investor in an investee company either through PMS route or CIV scheme route . 2.2. In terms of regulation 17(A)(2), manager of AIF shall file a shelf placement memorandum (template available at Annexure), that inter alia includes, principal terms relating to co-investments, governance structure, and regulatory framework for co-investment, etc. 2.3. Each CIV scheme shall have separate bank account and demat account and assets of each CIV scheme shall be ring fenced from assets of the other sch