Making registration for private equity (PE), venture capital (VC) and hedge funds compulsory under new norms, capital market regulator Securities and Exchange Board of India (SEBI), has ensured that pooling of investors’ money in India is regulated and investors are not kept in the dark about their investments.
“The regulator wants to ensure every pooling of funds in India is regulated and investors should know where the money will be invested,” said Avinash Gupta, leader, financial advisory, Deloitte India.
The new norms will also safeguard retail investors who were till now enticed to invest in PE funds in the name of high returns. As per the new norms, these funds are not allowed to accept investment of value less than R1 crore from a single investor.
The new norms will also prevent the PE industry’s practise of putting most of its money in just a couple of companies, as they will not be allowed to invest more than 25% of funds in a single investee company.