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SEBI seeks a balance in the business of alternative investment funds

July 31, 2023

SEBI seeks a balance in the business of alternative investment funds
Amid swelling private capital pools, the Indian stock market regulator is striving to strike a balance between encouraging money flow into startups and closely-held businesses, and guarding the interest of investors in private equity (PE) and venture capital (VC) funds which bankroll these unlisted ventures.

The Securities & Exchange Board of India (Sebi) is forming a working group, which would include senior fund industry officials like Gopal Srinivasan (chairman of TVS Capital Funds) and Renuka Ramnath (founder of the PE fund Multiples) to explore the way forward.
 
The group is expected to suggest ways to lower the costs of funds and make it easier for them to do business while keeping an eye on investor protection.
 
The development, according to industry circles, is the outcome of a tussle between the regulator and the fund lobby playing out for more than a year. Sebi had brought in a string of regulations as wealthy local and foreign investors poured money into alternative investment funds (AIFs)  the umbrella term for PE, VC, and angel funds which are regulated by it.
 
As money flowed in and the regulator pushed through measures for greater transparency and better governance of the funds and their managers, the fund lobby argued that the regulatory framework for AIFs, which handle the money of rich savvy investors, should be far less rigid than mutual funds investing on behalf of small investors.
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