Budget 2018: PE investors seek pass-through of losses at end of fund life

As per existing regulations, if there are losses in a fund at the end of its life, the same cannot be passed onto its investors

At a time when Finance Minister Arun Jaitley and his team would be getting set for Union Budget 2018-19, the private equity industry is seeking a pass-through of losses at the end of fund life for Category 1 and Category 2 alternative investment funds (AIFs).

According to the existing regulations, if there are losses in a fund at the end of its life, the same cannot be passed onto its investors. ‘‘This is a big issue with VC or infra funds. Over a fund life of eight-to-nine years, a fund may end up with one or two loss-making firms,” says Gopal