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SEBI seeks details on start-up valuation from PE, VC funds

Amid complaints from investors and recent reports of opaque accounting of a few unicorns, Sebi has asked a large number of funds to disclose their valuation practices

SEBI seeks details on start-up valuation from PE, VC funds
sbi
POSTED ON September 12, 2022 1:35 PM

The Securities & Exchange Board of India (Sebi) is taking a close look at how private equity houses (PE) and venture capital funds (VCF) value the startups and unicorns they bankroll.

Amid complaints from investors and recent reports of opaque accounting of a few unicorns, Sebi has asked a large number of funds to disclose their valuation practices.

Sebi has also asked these funds to share details like the qualification of the valuer, whether the valuer hired is an associate of the fund or its manager or sponsor, and if there was a significant change in the valuation methodology in the past three years among other things, according to an Economic Times report.

As per the Sebi directive, the funds have to also share - the date of latest valuation, cost of cumulative investments made, latest valuation of investment portfolio, whether the valuation exercise is based on audited or unaudited data of the investee companies, whether the valuation is done by an independent or internal valuer, if additional valuation exercise was carried out during a financial year, details of valuation methodology and if there were any deviations from the said methodology, and whether the scheme has a valuation committee.

With this, Sebi will get a sense of on the performance of the AIFs (alternative investment funds) and understand the valuation practices prevalent in the industry.
 

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