SEBI considering proposal to allow private equity funds to own AMCs

Private equity funds have shown interest in entering the Rs 37 lakh crore mutual fund industry.


The Securities and Exchange Board of India (Sebi) is considering a proposal to allow private equity funds to own asset management companies (AMCs), the Economic Times reported on September 8, citing people familiar with the development.

Private equity funds have shown interest in entering the Rs 37-lakh crore mutual fund industry.

The capital markets regulator is also mulling whether to allow loss-making sponsors to invest in mutual fund businesses provided they fulfil the fit-and-proper criteria, the report said.

As per the report, if a private equity fund has a net worth of Rs 150 crore and is able to establish the ultimate beneficiary, it would be able to invest in AMCs in India.

In April, SEBI formed a working group that will look at current regulations and recommends a separate set of eligibility criteria that allow private equity (PE) funds and other non-eligible entities, to sponsor a fund house.

SEBI said that the role of the working group would be “to recommend mechanisms for addressing conflict of interest that may arise if pooled investment vehicles/ private equity act as sponsor and to examine the need for sponsor to dilute its stake in asset management company from the existing requirement of holding at least 40 percent of the net worth and the alternative pathways that may be adopted in this regard.”

The current regulations state that any entity that holds 40 percent or more stake in a mutual fund is considered as a sponsor and is required to fulfil the eligibility criteria.

Moneycontrol could not independently verify the veracity of the report.

Moneycontrol News


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