Parth Shah
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Parth Shah
Register Valuer | CA | CPA | 15+ Years of Experiance
Parth Shah is the Founder and Team Leader of the company, bringing extensive expertise in business valuation and financial advisory.
Every Alternative Investment Fund operating in India in 2026 must now value its portfolio using an independent valuer, disclose the methodology to investors, and follow a stricter reporting cycle laid out by SEBI. That single shift, from self-reported NAVs to independently validated fair value, has changed how fund managers plan, document, and defend every rupee of reported value.
If you manage a Category I, II, or III AIF, or invest in one, this guide breaks down the current SEBI AIF valuation norms, the approved valuation methods, and the compliance checklist your fund needs to clear this financial year. At My Valuation, we work with fund managers, IBBI registered valuers, and independent valuation agencies to structure defensible AIF valuation reports that stand up to both regulatory review and investor scrutiny.
Key Takeaways
- Independent valuation is mandatory: SEBI now requires every AIF scheme to have its portfolio valued by an independent valuer, not the fund manager, under the amended AIF Regulations.
- Two approved standards: AIF valuations in 2026 must follow the IPEV Guidelines or Ind AS 113 Fair Value Measurement, with the policy disclosed to investors upfront.
- Only eligible valuers qualify: The independent valuer must be a Registered Valuer Entity, an independent CA firm, or an IBBI-registered valuer meeting SEBI’s eligibility criteria.
- Category rules differ: Category I and II AIFs must value at least twice a year, while Category III AIFs valuing listed securities may need to report NAV as often as monthly.
- Written valuation policy is compulsory: Every AIF must adopt a board-approved valuation policy covering methodology, frequency, override procedures, and conflict-of-interest safeguards.
- Material deviations trigger disclosure: Any change of more than 20% between two consecutive valuations must be reported to investors and the trustee with justification.
- Investor reporting has tightened: Quarterly reports to investors must now include the valuation methodology, the valuer’s identity, and any material assumptions used.
- Non-compliance is expensive: SEBI has powers to impose monetary penalties, cancel registration, or restrict fund operations for repeated or serious AIF valuation lapses.
What Are AIF Valuation Guidelines Under SEBI in 2026?
AIF valuation guidelines are the SEBI-issued rules that govern how Alternative Investment Funds must measure, report, and disclose the fair value of their portfolios to investors and the regulator.
The core framework sits inside the SEBI (Alternative Investment Funds) Regulations, 2012, as amended, along with subsequent SEBI circulars that tightened investor protection after concerns around inflated NAVs and inconsistent methodologies. In 2026, three principles anchor the framework: independence of the valuer, standardized methodology, and full disclosure to investors and trustees.
Why Have SEBI’s AIF Valuation Norms Become Stricter in 2026?
The stricter rules exist because AIFs now manage a very large pool of institutional and HNI capital, and inconsistent valuations directly hurt investors during redemptions, drawdowns, and exits.
Three practical drivers pushed SEBI to tighten the norms:
- Portfolio companies of many Category I and II AIFs are unlisted, making Fair Market Value harder to defend without an independent view.
- Investor complaints about NAV overstatement, especially close to fundraising or exit events, increased regulatory attention.
- Global standards like the IPEV Guidelines and Ind AS 113 have raised the bar for what qualifies as a defensible valuation report.
The result is a framework that no longer treats valuation as an accounting formality. It treats valuation as a governance function.
If your fund is preparing for its next valuation cycle and you want an independent, IPEV-aligned report your investors and trustee will accept, our team at My Valuation can structure the engagement end to end.
What Does the SEBI AIF Valuation Framework Cover?
The framework covers every AIF scheme registered in India, but the specific obligations depend on the category and asset mix.
Category-Wise Snapshot
| AIF Category | Typical Portfolio | Minimum Valuation Frequency | Preferred Standard |
| Category I | Venture capital, SME, infrastructure, social venture | At least twice a year | IPEV Guidelines |
| Category II | Private equity, real estate, debt funds | At least twice a year | IPEV Guidelines or Ind AS 113 |
| Category III | Hedge funds, listed and unlisted mix | Monthly for listed, half-yearly for unlisted | Ind AS 113 with market inputs |
For all three categories, the fund’s board-approved valuation policy must specify who values what, how often, and how disputes or deviations are resolved.
What Every AIF Valuation Policy Must Include?
- Approved valuation methodology per asset class
- Valuation frequency and cut-off dates
- Independent valuer eligibility and rotation policy
- Fair value hierarchy applied to inputs
- Conflict-of-interest safeguards
- Procedure for handling material deviations above 20%
- Investor disclosure format
Which Valuation Methods Are Approved for AIF Portfolios?
SEBI does not prescribe a single method. It expects the valuer to select the most appropriate approach for the asset, document the rationale, and apply it consistently across reporting periods.
The five methods most commonly used in AIF portfolio valuation are:
- Discounted Cash Flow (DCF) method: Preferred for cash-generating unlisted portfolio companies with predictable forecasts. See our detailed guide to the DCF valuation method for how discount rates and terminal value assumptions get built.
- Comparable Company Analysis (CCA): Uses trading multiples of listed peers, adjusted for size, growth, and liquidity.
- Recent transaction method: Anchors value to a recent qualifying funding round, subject to backtesting.
- Net Asset Value (NAV) method: Fits asset-heavy funds, holding companies, and real estate SPVs.
- Market price method: Standard for listed securities within Category III portfolios, using closing or VWAP references.
Our team helps fund managers document the method selection logic itself, not just the numbers, so the valuation report can defend the choice if SEBI, the trustee, or an investor asks. Talk to My Valuation about an AIF valuation review.
AIF Valuation Methods Compared
| Method | Best Suited For | Key Inputs | Main Limitation |
| DCF | Cash-generating unlisted companies | Forecasts, WACC, terminal growth | Sensitive to assumptions |
| CCA | Portfolio companies with listed peers | Peer multiples, adjustments | Peer selection is judgmental |
| Recent transaction | Recently funded startups | Round size, dilution, terms | Loses accuracy over time |
| NAV | Real estate, holding structures | Asset appraisals, liabilities | Ignores earnings power |
| Market price | Listed equity and debt | Exchange data | Not usable for unlisted assets |
Who Can Perform AIF Valuations Under SEBI Norms?
The independent valuer must be qualified, registered, and free of any material relationship with the AIF, its manager, or its sponsor.
SEBI recognizes the following:
- A Registered Valuer Entity (RVE) as defined under the Companies (Registered Valuers and Valuation) Rules, 2017
- An independent CA firm with a specified track record and no conflict with the fund
- An IBBI-registered valuer holding the relevant asset-class registration
Fund managers should verify credentials at engagement, document the independence declaration, and rotate the valuer periodically in line with the fund’s policy. For a shortlist of qualified professionals, our roundup of the top IBBI registered valuers in India is a useful starting reference.
What Is the AIF Valuation Frequency and Reporting Cycle?
The reporting cycle in 2026 is tighter and more granular than most funds are used to.
- Category I and II AIFs: Valuation at least twice a year, and always before any capital call, distribution, or investor onboarding at NAV.
- Category III AIFs: Monthly NAV for listed securities, quarterly or half-yearly for unlisted, with year-end audited valuation.
- Trigger events: Any material event, a portfolio company down round, regulatory action, secondary sale, or a change in control, forces an interim valuation.
- Investor communication: Quarterly reports must carry the NAV, methodology, valuer identity, and any deviations flagged in the period.
If your fund is behind on quarterly reporting or preparing for its annual audit, our team can build a valuation calendar and reporting template your ops team can run every cycle. Reach out to My Valuation to set it up.
AIF Valuation Compliance Checklist for 2026
Use this checklist as a quick internal audit before your next SEBI filing or investor report.
Governance
- Board-approved valuation policy in place and reviewed annually
- Valuation committee constituted with clear roles
Conflict-of-interest declaration signed by the valuer
Methodology
- Approved method selected per asset class
- IPEV Guidelines or Ind AS 113 followed consistently
- Fair value hierarchy applied and documented
- Backtesting completed against actual exits
Reporting
- Half-yearly or monthly NAV computed as per category
- Material deviations above 20% flagged and justified
- Quarterly investor report includes valuation disclosures
- Trustee sign-off obtained where applicable
Regulatory
- Valuation report retained for the statutory period
- Investor grievances on valuation logged and closed
- SEBI filings up to date, with no pending queries
What Are the Most Common AIF Valuation Challenges?
Even funds with mature ops teams run into recurring valuation issues. Being aware of them upfront saves audit time and investor friction later.
- Stale comparables: Public peer sets that were valid at fund inception may no longer represent the portfolio company two years in.
- Down-round adjustments: Fair valuing a portfolio company after a lower priced round requires careful waterfall analysis, not a flat markdown.
- Illiquid instruments: CCPS, CCDs, SAFEs, and iSAFEs need instrument-level valuation, not just an equity value allocation. Our note on CCPS valuation explains how the waterfall works.
- Data gaps in portfolio companies: Late audited financials from investees can force reliance on management estimates, which the valuer must document.
- Consistency across reporting periods: Method changes without written justification are one of the most common SEBI observations.
Our team at My Valuation handles the harder side of AIF valuations, complex instrument waterfalls, down-round modeling, and Ind AS 113 hierarchy calls, so your reports hold up under audit. Get in touch to review your fund’s valuation approach.
How Do IPEV Guidelines and Ind AS 113 Fit Into the Framework?
The IPEV Guidelines and Ind AS 113 are the two anchors SEBI relies on when it references “fair value” in the AIF context.
- IPEV Guidelines offer the private equity and venture capital industry’s global standard for fair valuation, with detailed treatment for unquoted equity, debt, and hybrid instruments.
- Ind AS 113 codifies fair value measurement under Indian accounting standards, defines the fair value hierarchy (Levels 1, 2, and 3), and drives audit-side expectations.
Most Category II AIFs run a hybrid where the valuation policy references IPEV as the methodology guide and Ind AS 113 as the disclosure framework. Both are compatible when documented carefully.
Conclusion
SEBI’s AIF valuation guidelines in 2026 are not a compliance checkbox. They are a governance framework that shapes how investors trust your NAV, how auditors sign off your fund, and how the regulator views your operational maturity. Independent valuation, IPEV or Ind AS 113 methodology, category-specific frequency, and clean investor disclosure are now the baseline every AIF is measured against.
My Valuation is an IBBI-aligned valuation firm working with AIF managers, portfolio companies, and CFO offices across India. We build board-ready AIF valuation reports, structure valuation policies from scratch, run quarterly NAV cycles, and support funds through SEBI queries, audits, and investor conversations. If your AIF is preparing for its next valuation cycle, a policy refresh, or a first-time SEBI filing, get in touch with our team and we will map the right approach for your fund.
Frequently Asked Questions
1. Are AIF valuations mandatory under SEBI in 2026?
Yes. Every registered AIF must have its portfolio valued by an independent valuer at the frequency set for its category. The valuation must be documented in a report and disclosed to investors and the trustee.
2. Who is qualified to perform an AIF valuation?
A Registered Valuer Entity, an independent CA firm meeting SEBI’s eligibility criteria, or an IBBI-registered valuer with the relevant asset-class registration can perform an AIF valuation, provided they are independent of the fund manager and sponsor.
3. How often must a Category II AIF value its portfolio?
A Category II AIF must value its portfolio at least twice a year, and additionally whenever a material event, capital call, or investor onboarding at NAV occurs.
4. What happens if two consecutive valuations differ by more than 20%?
The fund must disclose the deviation, justify it in writing, and report it to the trustee and investors. Repeated unexplained deviations attract regulatory scrutiny.
5. Which valuation method is preferred for unlisted portfolio companies?
There is no single preferred method. DCF, CCA, and the recent transaction methods are the most common. The valuer must select and document the most appropriate approach for the asset and stage.
6. Do AIFs need to follow IPEV Guidelines or Ind AS 113?
Both are widely accepted. Most funds reference IPEV for methodology and Ind AS 113 for accounting disclosure. The choice must be stated in the fund’s valuation policy.
7. Can the fund manager perform the AIF valuation internally?
No. The valuation must be performed by an independent valuer. Internal computations for management purposes are allowed, but the reported NAV must be backed by an independent valuation report.
8. What are the penalties for non-compliance with SEBI’s AIF valuation norms?
SEBI can impose monetary penalties, restrict fund operations, order corrective disclosures, and in serious cases initiate action against the fund’s registration or key management personnel.
