Sebi Seeks Information On Startup Valuation Practices From PE, VC Funds
The Securities and Exchange Board of India (Sebi) is closely monitoring how private equity companies (PEs) and ventur capital funds (VCFs) evaluate the startups and unicorns they finance, blaming investor complaints or recent opaque accounting reports.
According to the sources, capital markets regulators require some funds to disclose their valuation practises, any significant changes in valuation methods over the last three years, and the qualifications of valuers (if the valuer hired is an associate of the fund, its manager, or promoter) on this matter on September 12.
According to the Sebi directive issued on September 6, funds must also share the most recent valuation date, accumulated investment costs, the most recent valuation of the portfolio, whether valuation activities are based on audited or unaudited data from the invested company, whether the valuation was performed by an independent or in-house valuer, whether additional valuation activities were performed within a financial year, details of the valuation method, and whether there were any exceptions.
According to industry experts,the move demonstrates that market regulators are concerned about the reliability of fund valuations. Moreover, Sebi will gain an understanding of the performance of AIFs (Alternative Investment Funds) as well as the valuation procedures used in the industry as a result of this.
