Announcing a major development, Economic Affairs Secretary Mr. R.Gopalan said that private equity firms, which were unregulated till now, will be brought under SEBI regulations. Mr. Gopalan said that the market regulator had already started work on regulating private equity players and that the guidelines would be issued very soon.
The regulation of private equity firms comes at a time when there have been growing concerns over private pools of capital such as private equity. The Reserve Bank of India too, had voiced its concerns over the unregulated nature of the private equity firms in the past. Providing further insight into the regulation procedure, Mr. Gopalan said that the regulation would be on the same lines as that of venture capital funds. Right now, the venture capital regulations need compulsory registration with SEBI.
There were widespread concerns over the unregulated nature of private equity funds and hedge funds after the recent financial meltdown as they were seen as lacking transparency. The private equity firms invest in small companies and exit when they grow in size, thus taking hefty amounts of premium with them. The guidelines that are soon to be issued regarding the regulation of these private equities are meant for dispelling such fears prevailing in the market today.
Source: Economy News