Budget 2024: IVCA seeks reconsiderations over definition of PE firms' control adopted by CCI

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BENGALURU:The Indian Venture and Alternate Capital Association (IVCA) has sought a review of the Competition Commission of India's (CCI's) definition of control over companies by private equity (PE) funds in a meeting with the Union finance minister Nirmala Sitharaman ahead of the Budget 2024-25.“When PE funds invest in companies, they have some rights to protect themselves that can be viewed as a control position. So, the question was if there can be an exemption for PE funds," Srini Sriniwasan, vice-chairperson of the industry body for alternative assests, told Mint in an interview on Tuesday.Besides, the IVCA discussed measures to boost domestic capital in alternative investment funds (AIFs) to finance infrastructure, credit, startups and growth companies in the pre-budget consultation meeting on 20 June.The finance minister is expected to present the budget by July end.Sriniwasan, who is also the managing director of Kotak Alternate Asset Managers Ltd, asked for more clarity on the definition of what constitutes a PE investor.

“This money, which is coming from foreign direct investments (FDIs), is not seen as an organized pool of capital as AIFs, which at this point in time is the only recognized PE pool under the law," he said.When foreign investors invest through the FDI route, it becomes very hard to distinguish whether it is a PE fund or a strategic investor as the recipient of that money is either a company or the government, he explained. Therefore, a clearer definition that considers the broad-based nature of PE firms, which include both direct and indirect investors, will be imperative.Chrys Capital’s Ashley Menezes and Rajat Tandon, the president of the industry body, were also part of the discussions.