Global funds account for more than 90 per cent of control deals in India, leaving domestic institutions such as banks, insurance firms, and pension funds out of the equation, according to a top private equity official. Renuka Ramnath, CEO of Multiples Asset Management, highlighted this imbalance at an event organized by IVCA, noting that Indian funds have the capability but face regulatory restrictions that hinder their participation in such deals.
Ramnath pointed out that the alternative investment fund (AIF) regulations were designed to safeguard small investors and prevent the economy from being overleveraged. However, she emphasized the need to level the playing field for domestic funds and global peers by addressing regulatory barriers that limit the ability of Indian institutions to engage in control deals.
She also raised concerns about the challenges associated with using the Portfolio Management Services (PMS) route for co-investments, particularly regarding ownership and decision-making rights. Gopal Srinivasan, Chairman and Managing Director of TVS Capital Fund, echoed the need for the private equity and venture capital industry to enhance returns by expanding asset availability through different strategies such as control or buyout transactions.
Despite the potential for long-term compounding and value creation in private assets, Indian investors often face emotional hurdles when choosing between public markets and private equity investments. Srinivasan highlighted the importance of bridging this gap and improving returns in the private asset class to align with investor expectations.
In conclusion, the industry experts emphasized the importance of addressing regulatory challenges and fostering a more conducive environment for domestic funds to compete on an equal footing with global investors in the Indian market.
