Tag: AIF

PhonePe files plaint with SEBI against Ventureast

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PhonePe has filed a complaint against Ventureast Proactive Fund-II (VPF), an AIF operating out of India, with SEBI over its planned acquisition of OSLabs.

“The complaint relates to multiple violations of SEBI’s code of conduct in relation to VPF’s recent side dealings with Affle which are a deliberate bad faith attempt to scuttle OSLabs majority acquisition by PhonePe,” it said in a statement.

“VPF has not only broken SEBI’s code of conduct, but it has also acted in complete negligence of its fiduciary duties as a large shareholder of IndusOS,” said Sameer Nigam, CEO and Founder, PhonePe.

“By deliberately derailing PhonePe’s acquisition of IndusOS, a deal which all three OSLabs founders continue to also believe is in their company’s best long-term interests, VPF has also hurt OSLabs’ long term interests,” he further said, adding that it is important to expose such unethical conduct by VPF for the sake of the larger start-up ecosystem.

“We have a very strong case and are confident that we will prevail on both fronts, and hopefully in the process also create a strong deterrent against bad actors trying to bully young startups,” Nigam said in the statement.

The SEBI complaint in India is in addition to a lawsuit that PhonePe has already filed against Ventureast and Affle in the Singapore High Court.

The lawsuit claims that VPF deliberately deceived PhonePe, by continuing to engage PhonePe and OSLabs on the sale of its shares in OSLabs in favour of PhonePe even though it had sold those same shares to Affle in a side deal without OSLabs and PhonePe’s knowledge on a prior date during a legally binding no-shop period, the statement said.

While the legal matters will be settled in court, PhonePe has now approached SEBI to look into these gross ethical violations and dereliction of VPF’s fiduciary duties to protect the interests of OSLabs, its investee company, it added.

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Groww to acquire Indiabulls MF for Rs 175 cr, BFSI News, ET BFSI

Personal Finance

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Online investment platform Groww on Tuesday announced that it will be acquiring Indiabulls Mutual Fund for a total consideration of Rs 175 crore. The digital platform will acquire Indiabulls Asset Management Company (IBAMC) and the trustee company for Rs 175 crore, which includes a cash and equivalent component of Rs 100 crore, an official statement said, adding that the transaction is subject to regulatory approvals.

The Alternate Investment Fund (AIF) and Portfolio Management Service (PMS) businesses will be demerged from the existing IBAMC structure, and remain under Indiabulls Housing Finance, it said.

The announcement comes months after capital markets regulator Sebi had allowed digital platforms like fintechs to enter the mutual funds business and Groww becomes the first fintech to enter the asset management space.

Indiabulls Mutual Fund has 13 funds with the Quarterly Average Assets Under Management at Rs 663.68 crore as of March 2021, down from the Rs 921.33 crore in December 2021.

Selling the MF will help the parent Indiabulls Housing Finance’s capital position.

Groww has over 1.5 crore customers who use the platform to invest in mutual funds, stocks and exchange-traded funds (ETFs) and wishes to increase the retail participation in equity, the statement said.

“With the capability to create products, we plan to make mutual funds even more accessible – by making them simpler, more transparent, and by lowering the cost further,” Lalit Keshre, the chief executive and co-founder of Groww, said.

Indiabulls Housing Finance plans to grow its Real Estate Asset Management business through AIF structures in line with its asset-light strategy. While IBHFL will focus largely on retail disbursements, the AIF structure will be used for the wholesale opportunity of early-stage project finance, the statement said.

“We have made the decision to divest our interest in the retail mutual fund business to be able to consolidate capital and provide greater focus in building the company’s real estate asset management business by way of Alternate Investment Fund, in line with the company’s asset-light strategy,” Gagan Banga, the vice chairman and managing director of Indiabulls Housing Finance, said.

The Indiabulls Housing Finance scrip was trading 1.63 per cent down at Rs 183.80 a piece on the BSE.



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IRDAI must review prohibition on investment in AIF investment overseas

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While the Insurance Regulatory and Development Authority of India’s (IRDAI) decision to permit insurer’s investments in startups fund of funds is a good move, it needs to review the prohibition on investment in AIFs investing overseas.

According to experts, IRDA should revisit this blanket prohibition in light of the fact that market regulator SEBI permits AIFs to invest up to 25 per cent of the investible funds in overseas securities.

Under applicable insurance laws, an insurance company cannot directly or indirectly invest outside India, and hence IRDA whilst permitting insurer’s investments in FoF has prohibited investment by such an FoF in any AIFs investing overseas.

“However, IRDA should revisit this blanket prohibition in light of the fact that whilst SEBI permits AIFs to invest upto 25 per cent of the investible funds in overseas securities, at the same time SEBI also allows the AIF managers to excuse an investor from participating in any underlying investments, if such participation is not legally permitted for the concerned investor. Hence as long as an AIF can ensure that the monies invested by insurance companies do not even have an indirect overseas investment exposure, the insurer’s direct/indirect participation in such AIFs should be permitted,” said Tejash Chitlangi, Sr. Partner IC Universal Legal Advocates & Solicitors.

In a new notification on Friday, IRDA has allowed insurance companies to make their investments in FoF, subject to the condition that these investments are not made into overseas companies. The government has set up a Fund of Funds for startups with a corpus of ₹10,000 crore. The Small Industries Development Bank of India (SIDBI) is the operating agency for the FFS.

In March, the Government had issued a notification allowing private retirement funds to park five per cent of their investible surplus into AIFs. It stated that non-government provident funds, superannuation funds, and gratuity funds to invest in units issued by Category I and Category II AIFs, subject to certain conditions.

Ashley Menezes, Partner and COO, ChrysCapital Advisors, LLP & Chair, Regulatory Affairs Committee, IVCA said the move by IRDA allows insurance companies to derisk their exposure. “However, such capital from insurance companies cannot be utilized by an AIF to make investments outside India and this is a matter that still needs discussion.”

Siddharth Pai, Founding Partner and CFO at 3one4 Capital, Co-Chair at Regulatory Affairs Committee,Indian Private Equity and Venture Capital Association (IVCA) said the FOF system is the perfect vehicle in terms of diversification for Indian Institutional Capital and the inability of Insurance Companies, whose annual premium flows is orders of magnitude larger than the entire Indian AIF universe.

“One question that still needs to be answered is whether Insurance companies can invest into AIFs with overseas investments, provided that the amount invested by the Insurance Company into the AIF will not form part of the overseas investment. The inflection point for any startup ecosystem is when domestic institutional capital is allowed to start investing into the local ecosystem. This move by the IRDAI and the move by PFRDA last month shows the government’s intent to accelerate institutional rupee funding to startups, which will help in economic growth and job creation.” Pai said.

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Govt must think of many AIFs, rather than one bad bank: Kotak

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Instead of setting up just a single bad bank, the Centre should consider floating multiple such outfits in the form of Alternate Infrastructure Funds, Uday Kotak, Managing Director and CEO, Kotak Mahindra Bank, and President, Confederation of Indian Industry, said. The veteran banker also suggested the setting up of a development financial institution for infrastructure, while speaking at BusinessLine’s Countdown to Budget 2021 event on Wednesday.

“One of the suggestions we have made from the CII is rather than thinking about just one single bad bank, where you have a big challenge of clearing price, allow floatation of multiple bad banks in the form of Alternate Infrastructure Funds registered under SEBI. They should also be allowed to buy, in addition to securities, loans from banks and NBFCs balance-sheets and to be considered as part of the permitted activity for AIFs,” Kotak said while delivering the keynote address at the HDFC Bank powered conference themed ‘Unleashing the animal spirit in a pandemic hit economy’ .

‘Needed, a DFI’

He also suggested setting up of a development financial institutions.“The reason is if you look at NABARD, which has been a success in rural and agriculture, or SIDBI in the area of MSMEs, the time has come for a massive infra push for India’s growth transformation and through that creating a reverse demand for various other products and services. A DFI, with a creative way of funding that institution with long-term money, is something that may be appropriate,” he said.

Budget 2021-22, which is being presented amidst the Covid-19 pandemic, is not just about arithmetic but also about being a policy document that spells out a new future for the country, Kotak said.

“We are in the best of times, the worst of times…the pandemic is a once-in-a-hundred year event. For all the challenges it has created to lives and livelihood, it is also the best time for us to grasp the opportunity of a transforming world economy, Indian economy, and society,” Kotak said.

Five focus areas

He underlined five key focus areas that the Budget should focus on. These include infrastructure, healthcare, education, sustainability, and defence. Additionally, there is a need for a continued push in three areas of private investments, jobs and digitisation.

Finance Minister Nirmala Sitharaman, who will present the Budget on February 1, has promised a “never before” like Union Budget as the government looks to boost growth amidst the pandemic.

“I genuinely hope this Budget will live up to the expectation that it is a Budget like never before,” Kotak said.

He also called for a gradual normalisation of the fiscal deficit over a three-year period and recommended a stable tax and interest rate regime.

 

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