PMS cos seek nod for IPO, unlisted deals

Portfolio management services (PMS) firms have asked the market regulator to widen their investment universe, as the segment struggles to keep pace with rival products, four people aware of the discussions said.

- Apoorva Ajith & Srushti Vaidya

Key demands include allowing investments in unlisted markets and permission to participate as anchor investors in initial public offerings (IPO), both restricted for them.

Currently, only non-discretionary PMS allows up to 25% allocation to unlisted securities, such as alternative investment fund units, real estate investment trusts and infrastructure investment trusts. Discretionary PMS, which accounts for 92% of total PMS assets as of February, is not allowed to invest in unlisted securities.

The push comes as PMS growth trails mutual funds and alternative investment funds (AIFs), with industry executives pointing to tighter investment rules, operational constraints and tax friction as factors hurting competitiveness in India’s asset management market.

“Sebi (Securities and Exchange Board of India) is keen on growing this segment and making PMS a platform for wealth management. To do so, they are looking at increasing accessibility and to broaden the number of securities PMS firms can invest in,” said one of the executives mentioned above.

The push comes as PMS growth trails mutual funds and alternative investment funds.