In recent years, PEs and VCs have accounted for 30-50 per cent of foreign direct investment flows, which are more stable and value-added than portfolio flows. But, the industry is contributing well below its true potential.
The government needs to raise the trigger for the takeover code to 30 per cent, in line with most other markets, to facilitate capital flows to listed entities. It should also exclude preferential issues to PE and VC firms from the takeover code provisions and harmonise pricing guidelines with qualified institutional placements.
PE and VC-owned special purpose vehicles should be able to access domestic leverage, where boards of Indian companies approve such transactions while selling assets or companies.
The government should also create a framework for building a domestic PE and VC industry by allowing pension funds to invest in these funds in a calibrated manner. Irda should allow insurance firms to invest in non-infra domestic PE and VC funds
Amit Chandra
Managing Director, Bain Capital
