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Khaitan creates two PE funds in VC structure

Khaitan & Co has advised on the setting up of two domestic venture capital (VC) funds iPro Capital Private Equity Trust and Subhkam Growth Fund, with each planning to raise approximately Rs 100 crores in various sectors under their maiden schemes.

Subhkam’s current scheme was floated on 4 June 2010 after the company’s initial announcement to launch in 2008, while iPro Capital was launched in March 2010.

Both of these Securities and Exchange Board of India (SEBI- registered VC funds plan to invest in varied core areas such as infrastructure, health care, education and financial services.

Khaitan & Co Mumbai partner Daksha Baxi led the team in the complete structuring of these funds that included compliance with various SEBI regulations, drafting all the fund documents and registration with SEBI as Venture Capital Funds.

Baxi said: "Setting up a real 'PE fund' is a challenge in India in absence of a regulatory regime for the same. Hence, funds are constrained to register as VC funds."

Khiatan & Co said that Subhkam Growth Fund's first scheme proposed to take over certain investments made by the sponsor in the focus sectors, which was not a regular practice among venture capital funds. The firm advised on the legal and tax implications of the proposition, as well as the SEBI regulations.

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