SEBI alleges Exfinity Technology Fund breached 25% overseas investment limit

This order addresses alleged violations of SEBI's Alternative Investment Fund (AIF) Regulations by Exfinity Technology Fund and its associated parties, specifically concerning the failure to wind up the fund within the mandated timeline, exceeding the 25% limit for overseas investments, and failing to perform required semi-annual valuations.

Who it concerns: Exfinity Technology Fund, Exfinity Venture Partners LLP, Mr. V Balakrishnan, Mr. Shailesh Ghorpada, Mr. Chinnu Senthilkumar, Mr. Nihar Ranjan, and Vistra ITCL (India) Limited.

What SEBI found or ordered

• SEBI alleged that the fund failed to wind up by August 14, 2022, as required by Regulation 29(7) of the AIF Regulations, despite seeking an unauthorized extension to August 2023.
• SEBI alleged a breach of the 25% overseas investment limit (Regulation 15(1)(a)) between January 5, 2017, and July 26, 2023, when overseas investments reached 25.62% of investible funds.
• SEBI alleged a violation of Regulation 23(2) for failing to undertake the mandatory valuation of investments for the half-year ended September 30, 2023.
• SEBI alleged a violation of Regulation 28 for failing to intimate the Trustee (Vistra ITCL) about the overseas investment breach and valuation non-compliance.
• The fund had investments worth Rs. 6.34 crore (at cost) yet to be liquidated as of December 30, 2024.
• SEBI granted an additional liquidation period until April 24, 2025, via circulars dated April 26, 2024, and July 09, 2024.

Also in the document

• The fund's overseas investments included entities in the USA, such as Virtual Power Systems Inc., Lensbricks Inc., and Uniken Inc.
• The total investible funds of the scheme were reported as Rs. 104.07 crore, with Rs. 26.67 crore invested in overseas venture capital undertakings.
• The fund cited unfavorable market conditions as the reason for the inability to liquidate assets within the original timeline.