Indian hedge funds will grow rapidly despite a hesitant attitude from the country's regulators, industry participants said on Tuesday, as investors keep piling money into the nascent industry. The Indian hedge fund sector is one of the smallest in Asia, partly because tight rules make it hard to set up domestic hedge funds and burden access for foreign players, often forcing them to use cumbersome investment tools. "The Indian hedge fund industry started later because of a lack of feasible instruments ... But the fact that it is small now doesn't mean it's going to be small tomorrow," Peter Douglas at GFIA, a hedge fund research firm, told Reuters.   more »

Can the vulture nurture as well? Perhaps, it can. Distress asset funds (pejoratively called vulture funds) and distress asset arms of global hedge funds operating in India are increasingly beginning to focus on small and medium enterprises, a segment which is the preserve of commercial banks. These funds are also looking at investing in third generation entrepreneurs, where a split in the family usually means that individual members have to raise capital for their expansion. Over the past six months, funds specialising in distress assets like ADM, Clearwater, Citadel, Goldman Sachs Special Situations and DE Shaw have invested in such companies, say industry sources. For example, Spinnaker has invested in Spice Telecom and Clearwater in Sanghi Movers and earlier Diamond Cables.   more »