New focus to be on attracting domestic capital, says IVCA chair Srini Srinivasan

Subscribe to enjoy similar stories.The industry body for venture capital, Indian Venture and Alternate Capital Association (IVCA), will focus on drawing more domestic institutional capital into alternative investment funds (AIFs), even as structural bottlenecks continue to slow participation.“Pension funds and insurance companies allocate very little to AIFs despite regulatory permission,” said Srini Srinivasan, the newly appointed chairperson of IVCA and managing director, Kotak Alternate Asset Managers Limited, in an interview with Mint.While policies allow these institutions to invest in AIFs, execution remains a challenge, he said.One key hurdle is structural misalignment.For instance, the National Pension System (NPS) requires a daily net asset value (NAV), but AIFs do not provide this. This mismatch makes it difficult for pension money to flow into these funds.

Srinivasan added that institutions may also lack familiarity with AIFs or may have had poor past experiences.Recently, the NPS was allowed to invest up to 1% of its total assets in AIFs. While pension fund participation was permitted earlier as well, it was not practical to implement.“If you are an NPS subscriber, you would have to decide which AIF to invest in.

It is unclear whether most subscribers have the knowledge to make that decision,” Srinivasan said.IVCA will also focus on improving ease of doing business for both domestic and foreign investors, Srinivasan added.Regulatory changes have also created fresh friction in early-stage investing.The Securities and Exchange Board of India (Sebi) in September last year made it mandatory for angel funds to raise money only from accredited investors. Accredited investors are considered as investors with high