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On one side the government (rather Reserve Bank and SEBI) is wary of the increased private equity fund inflows, but on the other side, it's looking to relax norms for private equity funds in certain sectors. The Economic Times today reports that the government is contemplating allowing private equity funds to be part of the consortia bidding for infrastructure projects. Currently PE funds are allowed to invest only in companies that bid for such projects. They cannot directly bid. But the thinking in the government is now to allow them to bid too.
It, however, remains to be seen if the funds will want to directly involve in a bidding process, which always tend to get embroiled in politics and boardroom battles. Remember, the bids for the modernisation of airports became controversial with Reliance ADA Group battling out with GMR Group. Another one was Sasan power project, where Lanco-Golbeleq bid was disqualified by the ministerial group on allegation of misrepresentation of financial numbers. Infrastructure bidding is a different ballgame, and does a private equity fund have the bandwidth to manage it? Probably, the good side of it is that the private equity fund participation may increase the governance norms for good and a transparent bidding system.