Expert Views: Notable and Immersive Moments in Day 2 Fireside Conversation at IVCA Conclave
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| S Sriniwasan, MD, Kotak Alternate Assets and Ananth Narayan Gopalakrishnan, Whole Time Member, SEBI, sharing their perspectives on Day 2 of IVCA Conclave |
Day 2 of the IVCA Conclave 2024 featured an invigorating fireside chat between Shri Ananth Narayan Gopalakrishnan, a Whole-Time Member of the Securities and Exchange Board of India (SEBI), and S. Sriniwasan, Managing Director, Kotak Alternate Assets.
Shri Ananth Narayan Gopalakrishnan began by revealing some important data on the growth of the AIF industry: “The commitments now have reached 10.8 lakh crores, a 44% increase year-on-year on the total size of the commitment. For all of the funding winter and all of that, we’re still going great guns as far as the AIF commitments are concerned.” He added that actual investments have touched 4 lakh crores and that again has shown a 35% compounded annual growth rate over the last 5 years. There are now 1.4 lakh (approx.) investors in the entire AIF ecosystem.
“In terms of commitments, it’s about 50% foreign and 50% domestic. In terms of investments, it’s about 35% foreign and 65% domestic. Actual investments are still heavily weighted towards domestic,” continued Shri Ananth Narayan Gopalakrishnan. The actual investments for funds that have closed from 2012 to date seem to be only about 60–65% of the commitments (weighted by value). Moreover, only about 7% of the actual investments go into startups, as defined by DPIIT. While discussing the regulatory concerns of the industry, he urged for a collaborative approach. He also highlighted a key concern of policymakers and regulators: “We are seeing situations where the AIF structure has been used to circumvent existing financial sector regulations.” He also said, “We have got to be very clinical about this; we must ensure trust in the ecosystem. At the same time, we have got to make sure we don’t come in the way of good, productive capital formation.”
Shri Ananth Narayan also discussed how the industry’s concerns are being allayed. With reference to the liquidation scheme, which was considered onerous, he said, “We are doing away with it. We are proposing that you can continue with existing funds, but we will have checks and balances to ensure that our concerns around valuations, performance of the manager – all of that is taken care of. We’ll find a way out without necessarily requiring a new liquidation scheme.” He also revealed that SEBI is proposing that AIF investments into infrastructure SVPs will be allowed for raising debt in that particular SVP. In association with the RBI, a special situations fund will also be launched.
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