Thursday, 9 May 2019


As per the latest news, the committee headed by former RBI deputy governor HR Khan, is expected to recommend and include the suggestion of allowing foreign portfolio investors (FPIs) to invest in unlisted companies.

The benefits of FPI investment in unlisted companies:
  • It shall be a boost for startups and other unlisted entities as they shall get an access to wider pool of capital.
  • It shall ease the complexity faced by FPI earlier to invest in unlisted entities via FDI route.
  • It shall eliminate the “Grey Market” area in the regulation and will also reduce costs for FPIs.
  • FPI already have access to unlisted debts and local municipal bonds investment since last year. With this move they shall get access to equity investment in unlisted entities.

As per current regulations FPI are permitted to invest in “to be listed” entities but there was no clarity in regards to time-line by which these unlisted share should get listed for it fall within the permissible category.  

With this move SEBI aim to allow greater participation of FPIs in the Indian capital market and improve the ease of investing for foreign funds. With permission to FPI to invest in diverse assets under single FPI license will give a boost to this mode of funding.

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