The Hindu Business Line : Govt's move on FDI — Actis may take part in asset reconstruction

THE Government's decision to permit 49 per cent FDI in the equity capital of asset reconstruction companies has caused ripples of sorts with market watchers pointing out that several foreign financial firms are likely to enter this domain soon.

In fact, UK-based private equity player Actis, earlier known as the CDC Group, had some time back made a proposal to the Foreign Investment Promotion Board (FIPB) to participate in an asset reconstruction company (ARC) in India.

When contacted, Mr Donald Peck, Managing Partner, Actis said that the firm "may participate in a ARC in India. However, this would be through an autonomous entity altogether under a different brand and managed by a completely different team, independent of Actis. The entity is likely to function under the name Sirius." The new entity is expected to take a decision on its participation in ARCs once the Government's guidelines on security receipts are clear.

The Government is expected to soon allow FIIs to invest in the security receipts of ARCs, sources said.

Actis had made an application to the Foreign Investment Promotion Board (FIPB) around 18 months ago with a proposal to set up an ARC in partnership with Corporation Bank and ING Vysya Bank.

Actis will now have to approach the FIPB with a fresh proposal if it decides to go ahead with its plan. However, it is unlikely that the ARC will be in partnership with the earlier proposed partners.

As per Wednesday's directive, all such proposals will have to be routed through the FIPB.

At present, Arcil, which is promoted by ICICI Bank, IDBI and SBI, is the only operational ARC in the country.

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