Rajesh Begur, managing partner at ARA LAW, feels asset reconstruction companies are a form of pooling vehicle and in fact cannot be described as fund-based entity. He tells Banking Frontiers in an interaction that calling them fund based would be an overreach. The funds ARCs collect, says he, are meant solely to be employed in servicing bad assets to the best of their capacity and generate maximum returns to SR holders. “ARCs are, in no way, equipped to create returns in a true commercial sense like a private equity fund would do, and I am of the view that could not even have been the legislative intent,” he adds.
Begur also said that foreign investment up to 100% is allowed under the automatic route in ARCs. Therefore, an Indian ARC can be completely foreign owned. Given the spate of regulatory reforms in this regard, and the institution of Insolvency and Bankruptcy Code (IBC) which has brought in greater business opportunities for ARCs, they could prove to be one of the most sought after foreign investment avenues, he adds.
– Manoj Agrawal, Group Editor, [email protected]
