Now investments of overseas private equity (PE) funds in India will be under keen vigilance of the Department of Industrial Policy and Promotion (DIPP). To implement such vigilance policies, the DIPP may take the aid of SEBI, the capital market regulator. The wise step has been initiated to check the mal-practices of asset stripping, which is responsible for eroding the value of several companies. Currently, foreign investments are present in all the sectors, through the automatic route, therefore the primary way of sourcing information is to ask foreign PE funds to report their investment strategies.
This initiative will definitely be beneficial for the domestic companies as because it has been witnessed that foreign PE funds take over management rather that restraining themselves as financial investors. From now onwards, with the initiation of the vigilance by the DIPP, Government would supervise the outcome of such management. Therefore, it would be a real tough time for the foreign PE funds to act according to their whims.
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