The capital market regulator SEBI wants different schemes of private equity (PE) and venture capital (VC) fund to be separated from each other so that any stress and liabilities in one do not spill over into another, reported Economic Times.
As a matter of fact, foreign investors, offshore institutions and some non-resident Indians who bet on various local stories chased by these alternative investment funds (AIFs) prefer a ‘bankruptcy remote’ arrangement that separates multiple fund schemes from each other, the report said.
The Securities and Exchange Board of India brought the subject in a meeting of the Alternative Investment Policy Advisory Committee that has members comprising fund industry officials and senior experts, a person familiar with the discussions told ET.
The panel was formed by Sebi in 2015 under NR Narayana Murthy, co. Sebi is likely to bring about a change in AIF rules to formally shield each scheme under a fund, said an industry person.
In the absence of a clear regulatory segregation mechanism for AIF schemes, many global institutional investors prohibit investment managers of funds from launching multiple schemes.