SEBI GARUDA: Faster AIF Launches for Indian Markets

The Securities and Exchange Board of India (SEBI) has launched the Green-Channel: AIF Rollout Upon Document Acknowledgement (GARUDA) mechanism. This new regulatory framework aims to significantly accelerate the introduction of Alternative Investment Fund (AIF) schemes across India.

Streamlining AIF Scheme Launches

This initiative is designed to boost the alternative investment market by simplifying and speeding up the process for AIFs to bring new schemes and funds to market. The GARUDA mechanism introduces distinct pathways for different types of AIFs.

• Regular AIF schemes can initiate their launch process ten working days after submitting their application on the SEBI Intermediary portal.
• First-time schemes can launch either from the date of SEBI registration or ten working days post-application, choosing the later of the two.
• These schemes must file their Private Placement Memorandum (PPM) through a SEBI-registered merchant banker.
• The PPM filing requires a due diligence certificate and declarations from both the fund sponsor and manager.

Differentiated Approach for Specialized Funds

GARUDA also outlines a specific, expedited process for specialized categories of funds. This tailored approach recognizes the unique characteristics of these investment vehicles.

• Accredited Investor only funds, Large Value Funds, and Angel Funds are exempt from filing placement documents via a merchant banker.
• Instead, they must submit a duly signed and stamped undertaking from the Chief Executive Officer and Compliance Officer of the fund manager.
• These specialized funds receive immediate launch approvals upon filing their documents with SEBI.
• Angel Funds gain an additional benefit, being able to circulate their memorandum directly from the date of regulatory registration.

Enhancing Market Access and Investor Protection

The core objective behind the GARUDA mechanism is to broaden market access for investors. By reducing launch times, the regulator seeks to introduce specialized financial products more swiftly.

Investors are expected to gain quicker access to fresh alternative investment opportunities, particularly in rapidly evolving sectors. SEBI also emphasizes investor protection by requiring accountability from fund managers and intermediaries for their disclosures, with independent due diligence by merchant bankers ensuring transparent information for informed decisions.