In this edition, we explore the Indian capital market regulator’s move to steer investors towards a unified modern regime; Chinese fund managers leaning on state capital as US LPs pull back; Japan’s lead in deal performance; and finally, how Southeast Asia may be turning a corner on exits.
SEBI’s ultimatum to ‘old-guard’ VC Funds
The Securities and Exchange Board of India (SEBI) has done what regulators rarely do: it listened, it engaged, and it blinked, just a little.
After speaking to stakeholders and market participants, late last week, the Indian capital markets regulator granted one final lifeline to the country’s old-guard venture capital funds (VCFs) – that have long outlived their regulatory lives – an extension until July 2026 to wind down their portfolios.
But there’s a catch: the door only opens if these funds migrate to the ‘modern’ Alternative Investment Fund (AIF) regime by July 19, 2025. For PE and VC funds still operating under the nearly three-decade-old VCF Regulations of 1996, this is effectively the final chance to make a transition or shut down.
There are over 100 registered VCFs that are yet to either liquidate, dissolve, or
migrate, or surrender their license to SEBI, said Bharat Kedia, Director & Chief Operating Officer at Motilal Oswal Alternates. “These are old VCFs. AIFs came into place starting in 2012.”
SEBI introduced the AIF Regulations in 2012 to modernise the regulatory framework and replace the outdated VCF regime.
But, to be sure, this is more than just enforcing compliance – SEBI is also initiating a long-overdue clean-up of India’s private capital ecosystem, with its message completely unambiguous: migrate or disappear.
And this couldn’t have come at a more critical juncture.
