Unlisted shares in MF portfolios under lens

THE SECURITIES AND Exchange Board of India (Sebi) has reached out to asset management companies (AMCs) for data on unlisted equities, two people familiar with the matter said.

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The regulator wants to know the quantum of unlisted securities in the portfolios of AMCs, how they are being valued, what is the process followed to dispose them and the timeline for doing so, if any.

These could be shares of companies that eventually delisted, shares bought in the unlisted market that were expected to go for a public share sale but didn't, or unlisted shares resulting from a corporate action such as demerger of listed entities.

"At present, fund houses are not allowed to buy unlisted securities. But, historically, most fund houses would have unlisted equities in their portfolio," said a fund manager on condition of anonymity.

In 2019, Sebi had come out with a diktat disallowing MF schemes to invest in unlisted equity shares, and permitting investments only in listed or tobe-listed equities. The aim was to do away with the high risk associated with unlisted equity shares of companies.