The Securities and Exchange Commission of Pakistan has approved the first ever application filed by a non-banking finance company (NBFC) to undertake private equity and venture capital fund management services, according to a statement from the regulator.
The license will allow the NBFC to launch private equity and venture capital funds as well as alternative funds. The fund will be regulated under new private funds rules implemented in March 2015.
“The license granted by the SECP is the first step for regulation of private pools of capital that are raised locally for deployment by various types of investment funds,” the SECP said.
Last year, the commission took a number of measures to aid the development of the mutual and private funds industry in Pakistan, including the establishment of the Private Fund Regulations, 2015. Under this amended regulation, funds are required to include features such as investment strategy and disclose periodic information to investors, including valuation procedures and audits.
Prior to the amendments, fund managers faced more stringent regulatory requirements, including restrictions on the amount eligible investors were required to invest in a fund and the minimum size of a fund, both of which have been reduced.
Under the new regulatory requirements, private equity and venture capital funds should be established in closed-end structures for investment in the securities of an unlisted company or a company listed on an SME board or an unlisted company engaged in the business of investing in developing a new product or process or desiring expansion of its business.
“These comprehensive regulations will surely bring greater clarity to the market and will help in monitoring the unregulated funds and will encourage formation of new capital,” said the SECP.
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