What the market regulator's LVF reforms mean for HNI investors

Sebi plans to cut LVF entry limit to ₹25 crore and ease compliance by scrapping PPM, NISM, investor cap rules

- Neha Joshi

India's capital market regulator has proposed sweeping reforms for large value funds, including reducing the minimum investment threshold from ₹70 crore to ₹25 crore besides compliance relaxations. These changes could dramatically widen access for sophisticated domestic investors. Mint explains what is changing, why it matters, and the likely impact on India's alternative investment industry.

What are large value funds?

Large value funds (LVFs) are specific schemes of alternative investment funds (AIF) where every investor (excluding the manager, sponsor, and certain insiders) is an accredited investor and commits a large minimum amount. These funds already enjoy some relaxations, such as faster scheme launches, higher single-investee limits, longer tenure extensions, and equal rights for investors with waivers.

According to the Securities and Exchange Board of India (Sebi), as of 30 June, the LVF segment comprised 62 schemes with commitments of about ₹1.34 trillion and ₹60,000 crore in investment, indicating steady traction since their 2021 launch.

What has Sebi proposed?

Sebi has issued a consultation paper to ease rules for LVFs, aiming to widen participation by sophisticated investors, cut compliance costs, and align with global practices. Public comments are open until 29 August. Sebi has proposed the following:

Lowering the minimum investment per investor from ₹70 crore to ₹25 crore to broaden access without diluting investor sophistication.

Exempting LVFs from following Sebi's standard private placement memorandum (PPM) template, which specifies the personal responsibility of investment committee members for compliance, and the need for National Institute of Securities Markets (NISM) certification for an AIF manager's key investment team (for AIFs that run only LVF schemes).

Removing the current cap of 1,000 investors per AIF scheme for LVFs, citing high ticket size and accredited status as safeguards.