Aiming to bring unregulated and lightly regulated investment funds like hedge funds and private equity-venture capital funds under its ambit, Sebi on Monday came out with a comprehensive framework called Alternative Investment Funds (AIFs) Regulations. Market players feel that regulating hedge funds and investment vehicles that trade with short-term objectives is a step in the right direction. But VC industry veterans feel the steps could make capital raising by Indian-origin funds difficult.
“AIFs Regulations endeavour to extend the perimeter of regulation to unregulated funds with a view to systemic stability, increasing market efficiency, encouraging formation of new capital and consumer protection,” Sebi said. The regulation covers all AIFs, including PEs, real estate funds and hedge funds, and makes it mandatory for them to register with Sebi. The regulator has exempted existing PEs and VCs from the regulation till their mandates to run the fund come to and end. But these funds will not be able to raise any fresh funds from investors, Sebi said. VC/PEs who operate through an offshore vehicle structure do not come under this regulation.
Source: Times of India