Easier exit route for PEs & VCs on cards

Easier exit route for PEs & VCs on cards

PE, VC funding in Q1 of 2010 totaled $1.9 billion

“Consultations among the ministry of finance, corporate affairs ministry and Securities & Exchange Board of India (Sebi) are at an advanced stage for rolling out relaxed regulations for private equity and venture capital firms,” Corporate Affairs Secretary R Bandyopadhay said at an Assocham event here.

The relaxed rules and regulations will be unveiled by Sebi in the due course of time, as PEs and VCs fall under its direct jurisdiction, he added.

More transparency

He said that the current regulations do not provide a safer exit route to PEs and VCs, which has lowered the investment volume in the country.

“Currently, a safer exit route for PEs and VCs is not there and the concerned departments are working on it so that India is able to attract larger volumes of their investments,” Bandyopadhyay added.He also asked VCs and PEs to bring in transparency in their mode of operation and functions, indicating that policy makers were apprehensive that these investments fly away sooner than anticipated. As such, they would have to bring about changes in their modus operandi to resolve these concerns, he said.

According to a report by global consultancy firm Deloitte, private equity and venture capital inflows in the first quarter of the current fiscal were nearly half of the entire volume of US$4.4 billion seen in 2009.

PE and VC investments in the first three months of 2010 totaled US$1.9 billion and came from 88 transactions with an average size of US$22.1 million, it said. Last year, PE and VC funds pumped US$4.4 billion into the economy through 299 deals at an average value of US$14.6 million.