The Insurance Regulatory and Development Authority (IRDA) vide a circular dated 23 August 2013 has permitted both life insurance companies and general insurance companies (Insurers) to invest in Category I and II Alternative Investment Funds (AIFs), focusing on certain approved investments, viz. infrastructure entities, SMEs, venture capital undertakings (VCUs) and social venture entities, and registered with the Securities and Exchange Board of India (SEBI) under the SEBI (Alternative Investment Funds) Regulations, 2012 (AIF Regulations). This relaxation caters to the demand of the VC / PE industry, which had intensified particularly after the decision of the IRDA to permit investments by Insurers in only Category I AIFs in March, 2013. Khaitan & Co had assisted Indian Venture Capital Association (IVCA) in making a representation to IRDA to permit investments by insurance companies in Category I & II AIFs.
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