Why Sebi barred Mutual Funds from Pre-IPO Investments
Antara Bhattacharyya
SEBI Tightens Rules for Mutual Funds SEBI has restricted mutual funds from investing in unlisted pre-IPO shares to protect investors from valuation risks and opacity.
Concerns Over Transparency and Fair Valuation The regulator noted inconsistencies in pricing and lack of clear valuation benchmarks, raising fairness issues in pre-IPO asset disclosures.
Protecting Retail Investors’ Interests This move ensures small investors aren’t indirectly exposed to risky unlisted shares through mutual fund portfolios before IPO listing.
Impact on Fund Houses and Portfolio Strategy Mutual funds will now reassess strategies, focusing more on listed equities and regulated assets for transparent performance evaluation.
Promoting Market Discipline and Investor Confidence SEBI’s ban aims to create a fair, transparent, and trust-driven investment environment, strengthening the overall mutual fund ecosystem.