The Hindu Business Line : Old Lane may have to hold subsidiary plans

New Delhi, July 24 Private investment firm Old Lane may have to hold its plans to establish a wholly owned subsidiary in India with capitalisation of over Rs 200 crore, for providing credit enhancement services.

The Foreign Investment Promotion Board (FIPB) has asked the company to apply at a later date, as there is no regulatory mechanism for activities pertaining to credit enhancement services in India, at present.

Credit enhancement services refer to the act of assuming the financial obligations under a debt financial instrument in the event of a default by the issuer. Put simply, credit enhancement is a form of financial guarantee which enhances the issuer’s credit worthiness – thereby allowing him to access financial assistance at lower cost as a result of the guarantee given by the company providing credit enhancement services.

“We are advising the company to apply later, as the issue of foreign investment pertaining to the activities proposed by them are still under examination by the RBI,” a source said.

Old Lane LP is a private investment firm providing investment management and other financial services with offices in the US and the UK.

The company has proposed that the Indian subsidiary would provide credit enhancement services to issuers of debt, including municipalities, infrastructure companies and smaller borrowers (who lack collateral security or are otherwise unable to raise loan from banks).

Goldstone plan rejected

In another proposal, the FIPB has rejected the UK-based mineral exploration firm Goldstone Resources Ltd’s proposal pertaining to uranium mining, while pointing out that its plans for gold and diamond mining through a wholly owned company can proceed, as such activities fall under the automatic route.

The proposal to set up a wholly owned company for gold, diamond and uranium mining had come up for discussion at the July 13 meeting of the FIPB. Company officials, however, could not be reached for comments.

More Stories on : Venture Capital | Rural Development | New Projects

Article E-Mail :: Comment :: Syndication :: Printer Friendly Page