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Indian insurance industry given go-ahead to invest in private equity funds

28 Aug 2013

india_flag_170sqIndian insurance companies have been given the go-ahead by regulators to target private equity, fund of funds and debt fund investments.

The LP class had previously been restricted to investments in ‘category I’ alternative asset funds including closed-ended, non-leveraged venture capital, SME-focused and social venture vehicles.

But relaxed rules laid down by the country’s Insurance Regulatory and Development Authority have opened up the other asset classes to insurance companies under certain conditions.

They include the rule that at least 51 per cent of the funding into ‘category II’ funds must be targeted at infrastructure or SME-related entities.

Life insurance companies can expose up to three per cent of their total funds to alternative investment and venture capital vehicles, while general insurance companies can use five per cent of their investment assets.

Neither LP type can invest more than 10 per cent of a fund’s total capital – 20 per cent for infrastructure funds – or 20 per cent of its overall exposure in a single vehicle.

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