Corporate Governance and the Indian Private Equity Model

National Law School of India Review, Volume 27, Issue 1

UC Davis Legal Studies Research Paper No. 484

33 Pages Posted: 24 Feb 2016 Last revised: 25 Feb 2016

See all articles by Afra Afsharipour

Afra Afsharipour

University of California, Davis - School of Law

Date Written: February 22, 2016

Abstract

Private Equity (PE) firms have long invested in Western firms using a leveraged buyout (LBO) model, whereby they acquire a company that they can grow with the ultimate goal of either selling it to a strategic buyer or taking it public. Unable to undertake the traditional LBO model in India, PE investors in Indian firms have developed a new model. Under this Indian PE Model, PE firms typically acquire minority interests in controlled companies using a structure that is both hybridized from other Western investment models and customized for India’s complex legal environment. As minority shareholders in controlled firms, PE investors in India have developed several strategies to address their governance concerns. In particular, PE investors in India have focused on solutions to address local problems through the use of agreements that govern (i) the structuring of minority investments, (ii) investor control rights, and (iii) exit strategies. Nevertheless, recent governance and regulatory difficulties highlight the continuing uncertainty surrounding the Indian PE model.

Keywords: corporate governance, india, private equity

Suggested Citation

Afsharipour, Afra, Corporate Governance and the Indian Private Equity Model (February 22, 2016). National Law School of India Review, Volume 27, Issue 1, UC Davis Legal Studies Research Paper No. 484, Available at SSRN: https://ssrn.com/abstract=2736447

Afra Afsharipour (Contact Author)

University of California, Davis - School of Law ( email )

Martin Luther King, Jr. Hall
Davis, CA CA 95616-5201
United States

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