The Hindu Business Line : FIPB clears EFX Holdings’ plans for stake in Tata Cap, Crisil venture

New Delhi, June 6 Foreign Investment Promotion Board (FIPB) has approved Mauritius-based EFX Holdings’ plans to acquire 49 per cent stake in a proposed joint venture with Tata Capital and Crisil for credit information business in India.

The FIPB overruled Department of Revenues’ objection that the foreign investing company could be attempting ‘treaty shopping’.

“Revenue Department felt that main purpose of foreign investing company may be treaty shopping to enjoy the benefits of the double taxation avoidance agreement with Mauritius. They had objected to the proposal,” sources said. However, FIPB during its deliberation on the issue was of the view that routing through a tax haven could not be the grounds for a rejection and has given a go-ahead to the proposal.

Revenue Dept objections

Sources pointed out that the objection by the Revenue Department may have been in view of the routing of the investments; EFX Holdings is a wholly-owned by Netherlands-incorporated Equifax Decision Systems B.V, which is a subsidiary of Equifax Luxembourg, that in turn is a subsidiary of Equifax Inc, US.

EFX Holdings’ proposal entails picking up 49 per cent stake in the joint venture – Scout Data Management Services where Crisil and Tata Capital would hold 26 per cent and 25 per cent, respectively. Equifax Group is involved in the business of collecting and managing credit, financial, public record, demographic and marketing information pertaining to individuals as well as businesses.

EFX would initially invest of Rs 7.95 crore (49 per cent of the paid-up capital of Scout Data Management Services), while its total investment in the first three years could go up to Rs 39.70 crore. Crisil’s initial investment would be pegged at Rs 4.2 crore rising to about Rs 21.03 crore in a three-year period.

The joint venture would provide credit information services such as collecting, processing and collating information on trade, credit and financial standing of the borrowers of credit institutions which are members of the CIC and provide credit information and credit scoring to its specified users.

The Centre recently announced new FDI norms for CICs under which FDI up to 49 per cent is permitted subject to Government’s prior approval and RBI’s clearance.

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