What Does Gaja’s Listing Change for an Alternative Asset Manager? in India

Gaja’s IPO listing enhances AIF managers’ investment capabilities, fostering growth in India’s innovation ecosystem and attracting institutional capital. What does Gaja’s listing change for an alternative asset manager? An alternative asset management company like Gaja, has basically three streams of business.

One is the management fees that they get. Second is the return that they get on their invested companies above a certain hurdle, called carry. And third is a sponsor commitment.

SEBI regulations mandate asset managers to invest minimum 2.5 per cent of the size of your fund, in order to have skin in the game. So, this listing gives enough firepower to Gaja and any company which gets listed in future that they can make a sponsor contribution, removing the growth constraint. I want to congratulate SEBI and commend them for their decision to allow this listing of Gaja Alternative.

This is a very far-sighted move, a very forward-looking move. It also shows SEBI’s confidence that the regulations surrounding listed companies are tight and strong enough to give them confidence. The quarterly reporting, the rules regarding prevention of insider trading, disclosure norms, all those things are now proven in India to be very tight.

That has given SEBI the confidence that even if an alternative asset manager is getting listed today, so far as the interest of the retail investor is concerned, there is enough protection. I personally feel that based on what happened here today with regard to Gaja, many AIFs will try to get listed. And that will give them additional support or firepower to invest in the innovation economy.

How do you see the first AIF listing in the history of financial-sector businesses getting listed? Allowing financial services companies to get listed and get money from retail has been a policy dilemma and a policy challenge all the time. Banks were allowed to list because banks need capital.

Then several broking firms got listed after rules were put in place around segregation of client and proprietary money and disclosure requirements. Mutual fund asset management companies also had to address the question of whether listing could create a conflict with scheme investors, but safeguards were put in place. Depositories have been listed and then came exchanges.

When this matter came before me at SEBI, I was very determined that we have to move forward. So, I came out with this idea of no self-listing. Bombay Stock Exchange is listed on NSE.

MCX is listed on other exchanges. Listing should not be taken as something which is not to be touched with a barge pole. Listing is something which is part of natural growth.

If anything, listing should ideally make any company more transparent to investors. How important is the alternatives industry to funding innovation and startups? The government is very worried about the development of the innovation sector in the country.

We know what China is doing, what the rest of the world is doing, and how the future lies in technology and innovation across sectors. The government itself has set up fund-of-funds programmes and is putting money into funds floated by AIFs. Look at the need of the country and the realisation that there is a need even at the highest levels in government.

What Gaja’s listing does for the industry is in institutionalising alternatives AMCs which is a win-win because they can raise institutional capital and in turn make more investments in innovation through their AIF funds. So, in my view, it will give a serious boost to the start-up ecosystem. Does listing raise any risks because the asset manager will now have public shareholders?