SEBI Inquiry By Private Equity and Venture Capital Firms

 The venture capital and Banking Boutique Firms in Delhi that the capital market regulator regulates value the startups and unicorns that they invest in very carefully.

An inflated valuation presents a favorable appearance of the portfolio to the investors and prepares the way to raise more money from both new and existing investors when it conducts its next round of fund raising.

On 6th September, SEBI asked to disclose a large number of funds and valuation practices as a complaint is registered by investors for opaque accounts for a few months 

Richie Sancheti, founder of the law firm Richie Sancheti Associates, stated that SEBI "certainly wants to understand the legitimacy of the valuation exercise done by funds."

Consistency in the valuation process

This could serve as a model for upcoming valuation policies, greater disclosure standards, and other regulations that SEBI might impose on the AIF industry to ensure uniformity in valuation practices and raise investor interest transparency.

The majority of AIFs, which is the regulation term for PE and VCFs, are closed-ended funds with significant exposure to unlisted equities. 

Every month, open-ended startup funding are required to disclose their NAV, which represents the market value of the securities they own.

Since many wealthy Indian investors have started  an investment vehicle in the past few years, SEBI has been tightening the rules for the Startup vc funding.

AIFs must have independent trustees who are unaffiliated with the sponsor and fund managers, according to SEBI regulations from a year ago. 

According to a suggestion made by SEBI representatives at a meeting of the Alternative Investment banks delhi Policy Advisory Committee, the schemes of private equity and venture capital funds should be gauged from one another.