Large Value Fund for Accredited Investors
Also written LVF
An AIF or scheme in which every investor other than the manager, sponsor and their employees or directors is an accredited investor committing at least Rs 25 crore — with lighter regulation.
In plain language
AIF regulation assumes investors need protecting. When every investor in a fund is accredited and has put in a very large sum, SEBI relaxes that assumption. The result is the large value fund for accredited investors (LVF).
The workbook defines it as "an AIF or scheme of an AIF in which each investor (other than the Manager, Sponsor, employees or directors of the Fund or employees or directors of the Manager) is an accredited investor and invests not less than Rs. 25 crore", citing the SEBI (AIF) (Third Amendment) Regulations, 2025.
In exchange for that investor profile, an LVF gets wider concentration limits, a lighter PPM process, a longer permitted tenure extension, and exemption from the annual PPM audit. Any new scheme launched as an LVF must have "LVF" added at the end of its name.
How it works
What an LVF gets, per the workbook:
| Area | Ordinary Category III AIF | LVF for accredited investors |
|---|---|---|
| Concentration in one investee company | up to 10% of investable funds | up to 20% |
| PPM filing | through a SEBI-registered merchant banker, incorporating SEBI's comments | exempt — launched under an "intimation to SEBI" model, PPM filed with an undertaking signed by the manager's CEO and Compliance Officer |
| Changes to PPM terms | consolidated intimation through a merchant banker (specific changes may go directly) | may be filed directly with SEBI with the same undertaking |
| Tenure extension (close-ended) | up to 2 years, in two one-year extensions, with two-thirds approval | up to 5 years with two-thirds approval |
| Annual PPM audit | mandatory | not applicable where each investor commits at least Rs 25 crore (USD 3 million in non-INR currency) |
First close. An LVF must declare first close within 12 months from the date of grant of registration or the date of filing the scheme's PPM with SEBI, whichever is later.
Consent cannot be withdrawn. Accredited investors investing in an LVF — or in a Category III AIF launched exclusively for them where regulatory concessions have been availed — are not eligible to withdraw their consent to the accredited investor framework.
Fit with strategy. Because activist investing needs big capital commitments, the workbook calls LVFs the most suitable vehicle for the activist strategy.
A worked example
Illustrative figures. Western Ghats Special Opportunities LVF, a Category III AIF scheme, closes at Rs 750 crore from:
| Investor | Status | Commitment (Rs crore) |
|---|---|---|
| 18 family offices and corporates | Accredited investors | 25 to 60 each, 690 in total |
| A sovereign wealth fund | Deemed accredited investor | 50 |
| Two employees of the manager | Employees (excluded from the test) | 5 each, 10 in total |
Each investor other than the employees is accredited and commits at least Rs 25 crore, so the scheme qualifies. The employees' smaller commitments do not break the test, because employees and directors of the manager are carved out.
Concentration. Suppose investable funds are Rs 720 crore. The fund may invest up to 20% — Rs 144 crore — in one company; an ordinary Category III AIF would be capped at 10%, Rs 72 crore.
Tenure. The scheme's tenure is 4 years. Near the end, investors holding two-thirds by value agree to extend. As an LVF it can extend by up to 5 years; an ordinary close-ended Category III AIF could extend by only 2.
If an accredited family office wants to withdraw its accredited-investor consent midway, it cannot — that option is not available to investors in an LVF.
Why NISM asks about it
Chapter 5 (Regulatory Framework) defines the LVF at 5.3 and returns to it on PPM filing (5.6), first close and tenure (5.7) and concentration limits (5.13); Chapter 2 repeats the definition, Chapter 4 covers the PPM audit exemption, and Chapter 7 links it to the activist strategy. Expect questions on the Rs 25 crore threshold, the 20% concentration limit, the 5-year extension, the PPM filing exemption and the bar on withdrawing consent.
Common exam traps
- Rs 25 crore per investor, and every investor other than the manager, sponsor and their employees or directors must be accredited.
- 20% concentration limit for an LVF against 10% for an ordinary Category III AIF.
- Tenure extension up to 5 years (two-thirds approval), against up to 2 years in two one-year steps for an ordinary close-ended Category III AIF.
- No merchant banker for PPM filing, but an undertaking signed by the CEO and Compliance Officer of the manager is required.
- Accredited investors in an LVF cannot withdraw consent to the accredited investor framework.
- Name must end in "LVF". An AI-only scheme's name ends in "AI only fund" instead.
- First close within 12 months of registration or PPM filing, whichever is later.
Check yourself
1.In a 'Large Value Fund for Accredited Investors', which of the following investors is NOT required to be an accredited investor investing at least Rs 25 crore?
- a)A director of the Investment Manager of the fund
- b)A family office that holds a valid accreditation certificate
- c)An HNI whose accreditation certificate is valid
- d)A body corporate with a net worth well above Rs 50 crore
Show the answer
Answer: (a) A director of the Investment Manager of the fund
The workbook defines a Large Value Fund for Accredited Investors as an AIF or scheme "in which each investor (other than the Manager, Sponsor, employees or directors of the Fund or employees or directors of the Manager) is an accredited investor and invests not less than Rs. 25 crore". A director of the Investment Manager falls in the excluded group, so the test does not apply to him. The family office, the HNI and the body corporate are ordinary investors: each of them must be accredited and put in at least Rs 25 crore. A valid certificate or a large net worth does not excuse the Rs 25 crore test. The label matters because such funds may put up to 20 per cent of investable funds into one investee company, against the usual 10 per cent.
2.Indian Category III AIFs trading commodity derivatives may invest up to what share of their investable funds in one underlying commodity?
- a)10 per cent, subject to the reporting requirements set by SEBI
- b)20 per cent, the same as the investee-company limit for a large value fund
- c)25 per cent, the same as the overseas investment cap
- d)No separate limit, as long as leverage stays within 2 times NAV
Show the answer
Answer: (a) 10 per cent, subject to the reporting requirements set by SEBI
The workbook says Category III AIFs "are permitted by SEBI to invest in all commodity derivatives products that are being traded on the commodity derivatives exchanges. They can invest up to 10 percent of the investable funds in one underlying commodity, subject to the reporting requirements set forth by SEBI." The other figures are real limits for different things. 20 per cent is the single-investee-company limit for a large value fund for accredited investors. 25 per cent is the overseas investment cap. 2 times NAV is the leverage ceiling, which applies in addition to this limit and does not replace it.
3.A Category III AIF can invest up to what proportion of its investible funds in one single investee company?
- a)20 per cent
- b)10 per cent
- c)25 per cent
- d)5 per cent
Show the answer
Answer: (b) 10 per cent
This is the workbook's own sample question. The limit is 10 per cent of investable funds in one investee company, directly or through units of other AIFs. Option (a) is the higher limit available to a Large Value Fund for accredited investors, and option (c) is the overseas investment cap — both are real figures from this chapter used as distractors. The limit is measured at the cost of the investment, not at market value.
Where this is taught
- Series XIX-B · Chapter 3: Introduction to Category III AIF Ecosystemintroduced here
- Series XIX-A · Chapter 4: Regulatory Framework - Indian Contextintroduced here
- Series XIX-C · Chapter 17: Regulatory Frameworkintroduced here
- Series XIX-E · Chapter 15: Regulatory Frameworkintroduced here
- Series XIX-D · Chapter 14: Regulatory Frameworkintroduced here
Related terms
- Category III AIFThe AIF category for funds running diverse or complex trading strategies with leverage — hedge funds and their kin — and the only category denied tax pass-through status.
- Accredited InvestorAn investor certified by an accreditation agency as meeting SEBI's income or net-worth tests, and therefore allowed into products on relaxed terms — including below the Rs 1 crore AIF floor.
- Accreditation agenciesThe subsidiaries of stock exchanges or depositories, or other SEBI-specified entities, that verify an applicant's income and net worth and issue the certificate that makes them an accredited investor.
- Activist StrategyAn event-driven Category III AIF strategy that takes a significant stake in a company facing a material corporate event, aiming to improve its operations by participating in management.
- Private placement memorandumThe offer document of a Category III AIF, filed with SEBI through a merchant banker at least 30 days before a scheme launches — and the document SEBI comments on but never approves.
- PPM AuditThe mandatory yearly audit of a Category III AIF's compliance with the terms of its PPM, with findings reported to the trustee or board or designated partners, the manager's board and SEBI within 6 months of year end.
- Most Favoured Nation (MFN) ClauseA protection right a large investor negotiates so that no other investor in the Category III AIF is placed in a better position — usually delivered through a separate class of units.
- Liquidation PeriodThe 1-year period following expiry of an AIF scheme's tenure or extended tenure, for fully liquidating its assets and distributing the proceeds to investors.
- Sovereign Wealth FundA state-owned fund set up by countries with large trade surpluses — OPEC members, Norway, China, Japan, Singapore, Malaysia — that invests across markets, including through AIFs.
- Intimation to SEBI modelThe PPM filing route for AI-only Funds and LVFs: filed directly with SEBI without a merchant banker or SEBI comments, so schemes can launch immediately on filing (a first scheme only once registered).
- GARUDASEBI's Green Channel: AIF Rollout Upon Document Acknowledgement — the fast-track route that lets an AIF launch a scheme and circulate its PPM 10 working days after filing.
- Regular schemeAn AIF scheme that is not an LVF, an Accredited Investor Only Fund or an Angel Fund — so its PPM must be filed through a merchant banker at least 10 working days before launch.
- Ex-officio external memberAn external Investment Committee member who sits by virtue of an office — sponsor, sponsor group, investment manager group or investor in official capacity — so replacing them needs no investor consent.
- Accredited Investors only (AI-only) FundAn AIF or scheme in which every investor apart from the manager, sponsor and their employees or directors is an accredited investor — a class SEBI lets launch on intimation, with lighter investor-protection rules.
- Supervisory CommitteeA voluntary best-practice committee an AIF manager may set up, meeting at least once a year, with powers over outsize valuations, governance, fund terms and conflicts — but none to replace investor consent.
- Investment CommitteeA committee the manager of a Category I or II AIF may constitute to approve the fund's investment decisions; its members are responsible for those decisions and bound by the Code of Conduct.
- PPM Compliance AuditThe mandatory annual audit, at each financial year end, of a Category I or II AIF's compliance with the terms of its private placement memorandum — findings to the trustee, manager's board and SEBI within 6 months.
- Tenure of a SchemeThe life of an AIF scheme — from the date of first close to the last date of its term in the fund documents — fixed when SEBI is applied to, a minimum of 3 years, and extendable by 2 with two-thirds investor consent.
- Large value accredited investorAn accredited investor category whose portfolio manager may put up to 100% of assets under management into unlisted securities, against a 25% cap that applies to ordinary non-discretionary clients.