PE firms ask Sebi for flexibility in investments

Indian Venture Capital Association (IVCA), a body representing private equity and venture capital firms in India, wants Sebi to allow PE firms to invest across sectors, irrespective of the investment type. IVCA has given a memorandum to the regulator over its proposed guidelines to regulate the Indian PE industry.

“PE funds want the flexibility to invest in equity-linked and convertible instruments, as it is difficult to have a fixed valuation for companies in the growth stage and, hence, convertible instruments enable promoters to get a better valuation from PE investors,” the association said. It demanded a revision in the definition of ‘Alternative Investment Fund’ (AIF) to restrict its scope only to domestic AIFs which are pooling or raising private capital from institutional investors or HNIs from India.

“While Regulation 3 seems to suggest that only the funds that raise capital from India are within the scope of these regulations, the definition is very broadly worded and can include all types of foreign funds within its ambit,” IVCA says.