Sebi mulls standardised approach to valuation of AIF investment portfolios

The Securities and Exchange Board of India (Sebi) has proposed that alternative investment funds (AIFs) adopt a standardised methodology for valuation of investment portfolios managed by them.

At present, AIF regulations focus on disclosures to investors regarding the valuation of investments and presently do not prescribe any guidelines, managers of AIFs have the flexibility to adopt any methodology for valuation of investment portfolio.

"A standardised approach with regard to valuation principles/methodology/standard for valuing investment portfolio is one of the steps to ensure fair disclosure of value of investment portfolio to the investors," Sebi said on Friday in a discussion paper.

"It will also ensure that the valuation principles/methodologies/standards are uniform across the AIF industry and performance of a particular AIF as well as that of the AIF industry is benchmarked based on valuation carried out on uniform principle/methodology to reflect their performance in a fair manner."

The regulator said AIFs May be mandated to carry out valuation of their investment portfolio as per IPEV (International Private Equity and Venture Capital Valuation) Guidelines.

The regulator also proposed certain criteria for appointment of independent valuer.