Preferential Rules Makeover

Lots of additional disclosures, upfront pricing and frequent visits to the Ministry- that will be the fate of private unlisted companies if the draft rules on Preferential Allotment or Private Placement do become a reality. CNBC-TV18's Payaswini Upadhyay finds out if fund raising for private companies will soon get tougher.

USD 336 million in GMR Energy; USD 200 million in Coffee Day Holdings; USD 125 million in JSW Infrastructure- some of the largest private equity investments in 2010 were made in unlisted companies. This year, 85% of investments made by private equity have been in unlisted companies
Even the fortunes of several listed companies are controlled by private, unlisted companies that need to raise large funds.
These are just some investments in the unlisted space that the government is now trying to regulate. Last week, the Ministry of Corporate Affairs released draft rules for preferential allotment or private placement by unlisted public companies- draft rules that are being viewed as rather severe. Jayanta Banerjee
Managing Partner, Pravi Capital Advisors
Former President- Private Equity, ICICI Venture Funds
I guess there has been a lot of money which is getting invested in private companies which does not necessarily come into the public domain. So probably, the government wants to know what