The proposal of Forum Synergies (India) PE Fund Managers, which was in the process of raising single biggest SME fund, has been rejected by the Foreign Investment Promotion Board (FIPB). The recently formed private equity fund's proposal for transfer of funds from its Mauritius-based entity India Knowledge Manufacturing Company has been rejected. Bangalore-based Forum Synergies was planning to bring in up to $135 million(Rs 580 crore) from this offshore entity. The proposal for the issue class B and class C units to the offshore unit through the trust has also been rejected.

VC Circle could not reach Forum Synergies for their response and the reason for the rejection could not be independently ascertained. A Hindu Business Line report quoting sources says that the proposal was rejected as Department of Revenue believes that it may involve an alleged "treaty shopping" and possible "round tripping". Department of Economic Affairs also rejected the proposal due to lack of details about the offshore entity and said that the domestic entity was not registered as a VCF. Department of Industrial Policy and Promotion is also said to have rejected the proposal.   

The rejection comes at a time when the government along with SEBI is said to be tightening the norms for VC/PE industry. Government is said to be barring PIPE transactions and permit investment in only  invest only in "genuine new ventures" and not in established companies.

The PE firm is co-founded by former president & CEO of GE Consumer & Industrial for India Samir Inamdar. The other co-founders are Sudhir Kant and Prashant Goyal, who is the COO of the firm. Forum Synergies was planning to raise monies from HNIs, NRIs besides corporate and financial institutions based in US, UK, the Middle East and South East Asia through the Mauritius entity. Forum Synergies was planning to invest growth-expansion capital besides targeting small and mid sized firms eyeing pre IPO transactions.  

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