Sebi’s New Regulations Create Dilemma for Private Equity and Venture Capital Firms
The Securities and Exchange Board of India (Sebi) has introduced regulations that restrict preferential treatment for large investors, posing a significant dilemma for private equity (PE) and venture capital (VC) firms. This move has sparked various concerns amid ongoing debates in the industry.
Key Developments in Today’s ETtech
Other highlights include:
- WeWork India’s IPO
- Unicommerce’s bet on e-tail
- Paytm Cloud’s investment in Brazil
Funds Struggling with New Equal Treatment Rules
With the introduction of new regulations that mandate equitable treatment of all investors, PE and VC firms are in a quandary. The rules stipulate that the rights and share of each investor be proportional to their investment contribution, eliminating any special privileges afforded to larger investors.
Fund managers are now arguing that the existing structure makes compliance with Sebi’s regulations exceedingly difficult, leading several industry leaders to reassess these rules.
Understanding the Implications
- If a fund charges lower management fees to one investor, that investor may end up contributing a higher amount compared to another investor who pays a higher fee.
- As the invested amount is net of fees, lower fees leave more capital for investment, leading to a disproportionate return on investment for those benefitting from reduced fees.
- This results in an unequal distribution of gains within the Alternative Investment Fund (AIF).
Unlike mutual funds, AIFs typically feature varied categories of investors. In addition to lower fees, significant investors often enjoy additional benefits, including enhanced transparency and co-investment rights, which allow them to invest alongside the funds directly. Consequently, some funds might postpone investor payouts until they gain clarity on these regulations.
In Related News: The Indian government has issued tax clarity regarding asset sales in the VC space, which is expected to reduce litigation
OpenAI Launches ‘Deep Research’ Tool for ChatGPT
OpenAI has recently rolled out a new tool called “deep research” for ChatGPT. This tool aims to produce detailed reports and is launched against a backdrop of rising competition from the Chinese AI startup, DeepSeek.

How the Tool Works
According to OpenAI, this tool performs complex tasks in mere minutes that would typically take humans several hours. Users can submit prompts, and ChatGPT will analyze multiple online sources to compile a comprehensive report akin to what a research analyst might produce.
Quote from Sam Altman: “It is very compute-intensive and slow, but it’s the first AI system that can perform such a wide variety of complex, valuable tasks,” Altman shared on X, detailing the tool’s features, including its availability in the pro tier, with access to 100 queries per month.
India’s Growing AI Landscape
The surge in AI developments in India is partly fueled by challenges posed by international competitors like DeepSeek. This, combined with government incentives, has spurred local startups to advance foundational and specialized AI models.
- Pranav Mistry’s startup, TWO AI, will soon unveil its ‘SUTRA-R0’ model, which has significantly reduced costs by using advanced AI features.
- Fractal Analytics is set to make its reasoning system, ‘Ramanujan’, available as open-source.

The Ongoing Debate in Technology
Influential figures in technology are fiercely debating whether India should focus on building foundational models or applications on top of them. Proponents like Pranav Mistry believe India has the potential to develop large language models, while others, including Infosys co-founder Nandan Nilekani, advocate for building innovative applications. Mistry stated, “With our immense talent pool, we are capable of building frontier AI models.”
WeWork India Moves Toward Public Listing
WeWork India has filed its draft red herring prospectus (DRHP) with Sebi for an initial public offering (IPO).

IPO Details
- WeWork India’s parent companies, WeWork Inc. and Embassy Buildcon, plan to sell a combined total of 25% stake in the coworking giant.
- Embassy Buildcon will offload approximately 33.46 million shares while WeWork Inc. aims to sell around 10.3 million shares.
The company will not see any proceeds from the IPO, as the funds generated are earmarked for the parent companies. Recently, WeWork India raised Rs 501 crore through a rights issue directed to Embassy Buildcon, which was utilized to repay significant debt, thus boosting its financial standing.
Unicommerce Set to Capitalize on Ecommerce Expansion
Unicommerce Esolutions aims to leverage initiatives centered around ecommerce growth and digital adoption to drive performance in the upcoming quarters, according to CEO Kapil Makhija.

Financial Performance
Unicommerce reported a staggering 27% increase in their operating revenue, reaching Rs 33 crore in the October-December quarter. Additionally, net profit surged 62% year-on-year to Rs 6.3 crore.
Last November, the company successfully acquired shipping automation firm, Shipway, underscoring its commitment to growth and innovation in the sector.
Paytm Cloud’s International Expansion
Paytm Cloud has acquired a 25% stake in the Brazilian fintech startup Dinie for $1 million, widening its international financial services scope.

About Dinie
Dinie specializes in providing embedded financial services to micro and small enterprises in Brazil, marking an important milestone for Paytm Cloud, which operates the popular payments app Paytm.
Financial Snapshot
- In the December quarter, Paytm Cloud saw its operational revenue decrease by 35.8% to Rs 1,827 crore compared to the previous year.
- The net loss was slightly lower than the year prior, standing at Rs 208.5 crore.
Also Read: Paytm is set to add Rs 2,364 crore to its funds through the sale of PayPay shares.
Conclusion
The financial landscape is rapidly evolving, marked by regulatory changes, technological advancements, and key market movements. As firms adjust to new frameworks, stakeholders must remain informed and responsive to these significant developments.
FAQs
- What are Sebi’s new regulations regarding investor treatment? Sebi has implemented regulations requiring equal treatment of all investors, prohibiting special privileges for larger investors.
- How do these regulations affect PE and VC firms? The regulations create compliance challenges, particularly regarding fee structures and investment returns among different investors.
- What is OpenAI’s latest tool, and what does it offer? The ‘deep research’ tool by OpenAI generates comprehensive reports from multiple sources quickly, aiming to enhance AI-driven research capabilities.
- What milestone has WeWork India achieved recently? WeWork India has filed for an IPO, aiming to sell a 25% stake in the company.
- What recent acquisition did Paytm Cloud make? Paytm Cloud has acquired a 25% stake in Brazilian startup Dinie, which offers embedded financial services to small businesses.