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SEBI in favour of getting venture capital firms registered

Market regulator SEBI is in favour of more equitable investment by venture capitalists across a wide range of sectors instead of concentrating on a few segments of the economy.

india Updated: Aug 06, 2008 22:24 IST

Market regulator Securities and Exchange Board of India (SEBI) is in favour of more equitable investment by venture capitalists (VC) across a wide range of sectors instead of concentrating on a few segments of the economy.

“There is a tendency among venture capital funds to make large benefits at the shortest possible time,” said TC Nair, SEBI’s wholetime member at a meeting organised by Assocham here. “This has to necessarily change.”

Nair said that the market regulator was in favour of getting VCs registered with SEBI. Currently, 97 VCs have got themselves voluntarily registered with SEBI. There has been a steady climb in VC investment in India. Many traditional US and Europe-based VC firms have already invested over $10 billion India.

Venture capital firms invested $158 million over 26 deals in India during the first three months of the current fiscal year, according to a study by private equity tracking firm Venture Intelligence.

While IT companies continue to attract the majority of investments, non-IT investments have climbed 40 per cent with significant sectors being alternative energy, media and retail among others. VC investment in real estate companies during the quarter rose a modest 2.2 per cent.

A top finance ministry official said VC funding presents a “classic public policy challenge”.

“Venture capital as a category has a tremendous role to play. It is a difficult area to regulate,” said KP Krishnan, joint secretary (capital markets) in the finance ministry. “We need to know the volume of investment made by venture capitalists in the country.”

Kalpana Jain, senior director, Deloitte, said venture capitalists usually invest in high-growth areas.