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September 02, 2005

“Regulators need to watch out for Private Equity firms”

In the context of the launch of large buyout-focused PE funds like Blackstone and The Carlyle Group in India, Raghuvir Mukherji, a consultant with the Financial Securities Group of Infosys Technologies, stresses, in a Business Line column, the need for urgent regulation in three areas:
The level of gearing expected (including, if necessary, mandatory credit ratings for these firms) to prevent them from creating an asset bubble;

Publishing of data on activities of these firms and those they take-over, to prevent them from using the latter to do things that fall within the grey areas of the law;

Minimum lock-in period for these equity firms to prevent them from asset-stripping the companies they promise to turn around.