Sebi may announce new norms for angel investors
25 Jun 2013 10:54 PM GMT
With an aim to encourage entrepreneurship in the country by financing small start-ups, market regulator Sebi plans to bring in new norms for angel investors, who provide funding to companies at their initial stages.
According to proposals being considered by Sebi, angel investors can be allowed to be registered as Alternative Investment Funds (AIFs) -- a newly created class of pooled-in investment vehicles for real estate, private equity and hedge funds, a senior official said.In order to ensure investment by angel funds is 'genuine', Sebi plans to restrict investment by such funds between Rs 50 lakh and Rs 5 crore.
Among other norms included, angel funds can make investments only in those companies which are incorporated in India. These funds needs to be invested in a firm for at least three years, can invest in companies not older than three years.
Further, investee company to be unlisted and with a maximum turnover of Rs 25 crore and this firm may not be related to a group with a revenue of more than Rs 300 crore.The steps required to be taken on these matters may be considered at a Sebi board meeting scheduled for Tuesday.
The regulator also plans to stipulate that the fund must not have any family connection with the investee company and that no angel fund scheme may have more than 49 investors.
The new norms would help in encouraging entrepreneurship in the country by financing small start-ups at a stage where such start-up finds it difficult to obtain funds from traditional sources of funding such as banks, financial institutions among others.Finance Minister P Chidambaram in his budget speech had announced that Sebi would frame guidelines for angel investor pools by which they can be registered under AIF venture capital funds (VCF).
Under Sebi guidelines, AIFs already have sub-categories such as Venture Capital Funds, Social Funds and SME Funds.Angel fund is likely to be a separate sub-category.Regarding raising of funds by an individual investor, the person should have an experience of 10 years and should possess assets of atleast Rs 2 crore.In case an investors is a corporate entity, it should either have a net worth of Rs 10 crore or registered as AIF/ VCF with Sebi.
According to proposals being considered by Sebi, angel investors can be allowed to be registered as Alternative Investment Funds (AIFs) -- a newly created class of pooled-in investment vehicles for real estate, private equity and hedge funds, a senior official said.In order to ensure investment by angel funds is 'genuine', Sebi plans to restrict investment by such funds between Rs 50 lakh and Rs 5 crore.
Among other norms included, angel funds can make investments only in those companies which are incorporated in India. These funds needs to be invested in a firm for at least three years, can invest in companies not older than three years.
Further, investee company to be unlisted and with a maximum turnover of Rs 25 crore and this firm may not be related to a group with a revenue of more than Rs 300 crore.The steps required to be taken on these matters may be considered at a Sebi board meeting scheduled for Tuesday.
The regulator also plans to stipulate that the fund must not have any family connection with the investee company and that no angel fund scheme may have more than 49 investors.
The new norms would help in encouraging entrepreneurship in the country by financing small start-ups at a stage where such start-up finds it difficult to obtain funds from traditional sources of funding such as banks, financial institutions among others.Finance Minister P Chidambaram in his budget speech had announced that Sebi would frame guidelines for angel investor pools by which they can be registered under AIF venture capital funds (VCF).
Under Sebi guidelines, AIFs already have sub-categories such as Venture Capital Funds, Social Funds and SME Funds.Angel fund is likely to be a separate sub-category.Regarding raising of funds by an individual investor, the person should have an experience of 10 years and should possess assets of atleast Rs 2 crore.In case an investors is a corporate entity, it should either have a net worth of Rs 10 crore or registered as AIF/ VCF with Sebi.
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