Blaming investor complaints or recent opaque accounting reports, the Securities and Exchange Board of India (Sebi) is closely watching how private equity firms (PEs) and venture capital funds (VCFs) evaluate the startups and unicorns they fund.

Capital markets regulators require some funds to disclose their valuation practices, any significant changes in valuation methods over the past three years, the qualifications of valuers (if the valuer hired is an associate of the fund or its manager or promoter) on this matter, The Economic Times quoted two people familiar with the matter as saying on September 12.

According to the September 6 Sebi directive, funds are also required to share the latest valuation date, accumulated investment costs, the latest valuation of the portfolio, whether valuation activities are based on audited or unaudited data from the invested company, whether the valuation was carried out by an independent or in-house valuer, if additional valuation activities were carried out within a financial year, details of the valuation method and whether there were any deviations from the above, and whether the plan had Valuation Committee.

According to experts who spoke with ET, the move shows that market regulators want to know the credibility of the valuations made by funds. With this, Sebi will understand the performance of AIFs (Alternative Investment Funds) and understand the valuation practices prevalent in the industry.