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AIFs raising funds should hire i-Banks: Sebi

Economic Times  

The Securities & Exchange Board of India (Sebi) wants all private equity (PE) and venture capital (VC) funds raising money to hire investment banks - a proposal that fund houses are trying to push back on. The regulator wants a third-party intermediary, governed by rules of the capital market, to verify information in an alternative investment fund's (AIF, the regulatory term for PE and VC funds) private placement memorandum (PPM). The stand taken by Sebi follows large funds - running multiple schemes with thousands of crores of assets under management (AUM) - submitting PPMs that are incomplete and often in violation of regulations. Sebi thinks that the presence of a merchant banker would help in reducing irregularities in PPMs and quicken clearance of applications. But the regulator will have to dispel the fears that AIFs harbour.