Challenges and opportunities in private capital and the role of regulatory entities
FinTech BizNews Service
Mumbai, February 26, 2024: The second day of the IVCA Conclave 2024 in Mumbai featured a fireside chat between Shri Sivasubramanian Ramann, the Chairman and Managing Director of the Small Industries Development Bank of India (SIDBI), and Shri Pradeep Ramakrishnan, Executive Director, International Financial Services Centres Authority (IFSCA). The discussion was moderated by Vikram Gupta, Founder and Managing Partner, IvyCap Ventures.
The discussion covered challenges and opportunities in private capital and the role of regulatory entities. Shri Sivasubramanian Ramann began, “Public capital has one of its pillars in the concept of retail investors and therefore protection of the retail investor. That is extremely important if you want to democratise ownership of stock. Private capital typically does not have that. Therefore, it has and it should have a very unstructured set of regulations, not unstructured as much as limited set of regulations.”
He added, “The country really needs a 10X growth in this capital. Much of the capital has come from abroad, but I think increasingly there’s a larger contribution of domestic capital to the kitty of AIFs. So, if we are looking at 10X growth of private capital, which will then go to a semiconductor factory or a deep science portfolio company, and we need this capital to stay patient for 15–20 years, I think that is what we have to ask ourselves, and we need to come out with the right answers because at the end of it, every regulation is made by some of us and it, therefore, can be tailored to what the situation needs.”
On how to encourage dollar capital, Shri Sivasubramanian Ramann said that with the advent of better fund management and a better track record, “what is a trickle might turn into a flood when it comes to domestic, and as far as foreign is concerned, I think it’s really India risk or country risk, which becomes the most important thing for them. We certainly hope that has reduced over the last few years. But with regard to what the government itself has done, if you were to look at it, what the government really did was put ₹10,000 crores into the market without having a surplus. It’s not even a sovereign fund, which is made from budgetary surpluses. The government actually put the most risky capital into the market, and thanks to all of you and the work done at SIDBI, we’ve managed to grow something into a very strong industry. With the next couple of announcements that have happened in this Budget, of ₹1 lakh crores for innovation, ₹50,000 crores for deeptech research and defence-based research, we’ll probably end up having double the number of AIFs very soon and those many more great companies getting formed.”
