SECP approves licence under new private fund rules

ISLAMABAD: The Securities and Exchange Commission of Pakistan (SECP) has approved the first-ever application filed by a non-banking finance company (NBFC) under the newly-promulgated Private Funds Regulations 2015 to undertake private equity and venture capital fund management services, a statement said on Tuesday.

The licence will allow the NBFC to launch private equity and venture capital funds (PE &VC funds), as well as alternative funds. The licence granted by the commission is the first step for regulation of private pools of capital that are raised locally for deployment by various types of investment funds, it said.  It will facilitate the raise of funds from high net worth investors through several varieties of funds such as private equity funds, infrastructure funds, hedge funds, debt funds, etc.

As per the prevalent regulatory requirements, the private equity and venture capital funds should be established in closed-end structure for investment in securities of unlisted company or a company listed on the Small and Medium Enterprises board or an unlisted company engaged in business of investing in developing a new product or process or desiring expansion of its business.

The statement issued by the Securities and Exchange Commission of Pakistan also said the alternative fund should be established for investment in portfolio of securities and other financial assets.

These funds would be regulated under the Private Fund Regulations 2015, which has comprehensive features such as investment strategy, disclosure of periodic information to investors, valuation procedure, audit of fund, etc. These comprehensive regulations will surely bring greater clarity to the market and will help monitor the unregulated funds and will encourage formation of new capital.