The Securities Exchange Board of India (SEBI) is considering a long-term alternative funding window for unlisted companies.
The idea is to allow Permanent Capital Vehicles (PCVs) to provide long-term funding opportunities for unlisted companies.
A sub-committee under SEBI’s Alternative Investment Policy Advisory Committee is currently examining the proposal to determine who can invest in these vehicles, the minimum investment amount required, and how the rules would differ from existing Alternative Investment Funds (AIFs).
The goal is to establish a regulatory framework that allows permanent vehicles to hold unlisted shares for as long as they want.
According to a report, the underlining reasoning is to encourage investors that take a long-term view of a business rather than seeking short-term returns, which could make deep capital available for unlisted companies.
It is also expected that PCVs can provide flexibility advantages by investing in projects that require a longer timeframe than traditional investment vehicles may be able to provide.
However, one disadvantage is that PCVs are illiquid investments, meaning it can be challenging for investors to buy or sell their stakes in the vehicle, which could be a concern for those who need to access their funds quickly. The sub-committee will provide recommendations to the regulator, who will have the final say on the matter.