Private equity is used to cover both buyouts, when a fund buys an established business. Some funds focus on the early stage business, buyout situations and growth capital, some invest inn one another. Private equity is usually self-liquidating, i.e., they make a single set of investments, and when the investment is sold, and the proceeds are returned to the investors and these proceeds are not available for reinvestment. However, there are some funds which are not self-liquidating, and these funds are called evergreen funds.

In India, private equity investments have been growing at a very high scale. This scale of high growth can be attributed to the fact that the companies which have private equity funds perform better. There are regulatory provisions which have governed the private equity investments, and over the years, these provisions have seen notable changes. These changes have taken place in the companies act, 2013, security laws which have been enacted by the Securities and Exchange Board of India (SEBI), the Income Tax-Act, 1961, and the Foreign Exchange Management Act, 1999.

Its been almost quarter of a century since India has opened up its economy to the rest of the world. But there is still regular tweaking and tinkering in India’s commercial laws, those which govern PE transactions and those which govern business deals. The pace of the reforms in India have been slow and hence the pace and speed in regulatory action has been highly criticised. The framework has been constantly changing in this sector. However, this does not need to always present the situation with problems. It can also present new opportunities.