A high-level panel set up by the finance ministry to look into issues being faced by venture capital (VC) and private equity (PE) investors is examining the feasibility of introducing a "broad-based" rule for alternative investment funds (AIFs), which include PE and VC funds. Currently, AIFS do not have any broad-based regulation, requiring a large number of investor representations.
PE and VC funds, which typically invest in start-ups or unlisted securities, hold money for a small group of investors or even a single investor.
The six-member panel former Sebi chaired by Chairman M Damodaran is learnt to have discussed whether a broad-based parameter as applicable on mutual funds should be introduced for AIFS, too, according to two persons in the know.
Currently, mutual funds have broad-based requirements. According to the norms, every MF scheme needs to have a minimum of 20 investors and a single investor cannot account for more than 25 per cent of total assets managed by that scheme.
"There is an impression that a small group of investors can influence portfolio configuration and fund manager. Having clear criteria shall give a sense of investors' valuation practices, nature of business, and so on," said one of the sources.
This story is from the October 03, 2022 edition of Business Standard.
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This story is from the October 03, 2022 edition of Business Standard.
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