SEBI to regulate private equity & real estate funds; move may face stiff resistance from industry
The Securities & Exchange Board of India proposes to regulate fund pools, such as private equity and real estate funds, to reduce fraud and risk to public markets. However, the move may not be received well by the industry which has had a free run for more than a decade. The regulator, which last week ushered in takeover norms, widely seen favouring private funds, may be neutralising some possible negative effects of them, by proposing many limits and definitions of alternative investments. Investment limit in portfolio management schemes may be raised five times the current level and 1 crore may be set as minimum investment in private funds. Private pool of funds may be classified into venture funds (to invest in start-ups) and private funds (to invest in unlisted companies or a company planning listing). Private investment in public equity funds will be allowed to buy stake in listed firms that are not part of any index. Debt funds, infrastructure equity funds and social venture funds also figure in the list. The flexibility that a fund enjoyed to invest in whichever asset class it liked may come to an end.
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