Easier exit route for PEs, VCs in pipeline: Corp Affairs Secy

The Corporate Affairs Ministry is trying to work out an easier exit route for private equity funds investing in Indian companies, in consultation with other ministries and departments of the government.

"Consultations among the Ministry of Finance, Corporate Affairs Ministry and the Securities and 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 today.

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.

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 $4.4 billion seen in 2009.

PE and VC investments in the first three months of 2010 totaled $1.9 billion and came from 88 transactions with an average size of $22.1 million, it said.

Last year, PE and VC funds pumped $4.4 billion into the economy through 299 deals at an average value of $14.6 million.