Private Equity

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Sebi to allow PE fund\s to sponsor Mutual Funds: report

Hindustan Times  

The Securities and Exchange Board of India (Sebi) is likely to allow Private Equity (PE) funds to be sponsors of mutual funds. (An entity with a stake of 40% or more in an asset manager is considered its sponsor.) Currently, only banks, non-bank lenders, or those with more than five years of experience in managing a public pool of funds are allowed to be mutual fund sponsors. Sebi's proposed regulations will give conditional approvals to PE funds seeking to buy a majority stake in AMCs. The new norms will require PEs to fulfil a certain net-worth criterion, size, experience and adhere to certain lock-in norms to be eligible to be sponsors or buy control of any AMC. In addition, any PE wanting to be a mutual fund sponsor may be required by Sebi to commit capital worth over INR 100 crore, as long as they intend to be the sponsor or the owner in control of the mutual fund business. Furthermore, the PE firm may have to adhere to different regulations for launching open-ended and close-ended equity-oriented schemes.