Money & Banking

Pension funds may be allowed to invest in private equity, venture capital

Our Bureau New Delhi | Updated on January 23, 2018 Published on April 09, 2015

Hemant Contractor, Chairman, PFRDA

Bajpai panel report moots revamp of investment guidelines for NPS

Pension regulator PFRDA is looking to allow pension funds to deploy monies in private equity and the venture capital industry, said Chairman Hemant Contractor.

A high-powered committee headed by former LIC Chairman GN Bajpai has, in its report, made a case for phased approach in this regard, Contractor said at an Assocham event in the Capital on Thursday. In September 2014, the PFRDA had set up this committee to review the investment guidelines for the National Pension System (NPS). The panel’s report was submitted to the Pension Fund Regulatory and Development Authority on Wednesday.

The PFRDA chief said that allowing pension monies to flow into private equity and venture capital will help diversify the asset base for pension funds.

2-3 year timeframe

“We are looking at a two-three year time horizon by when the doors of the pension sector could be opened up for pension funds to invest in private equity and venture capital,” Contractor said.

If this were to happen, India would join the club of several developed countries where pension monies are routinely invested in private equity and venture capital. Reacting to the PFRDA chief’s remarks, Arvind Mathur, President, Indian Venture Capital and Private Equity Association, said that the industry welcomes this reform and saw it as a step in the right direction.

Later, RV Verma, PFRDA Member, told BusinessLine that the effort of the pension regulator in the coming days would be to move away from guided/directed investments to a prudent investment regime.

The whole reform of allowing pension monies to flow into private equity and the venture capital industry would cover Central/State government employees as well as those in the private sector.

Kalpana Jain, Chairperson, Private Equity and Venture Capital Association of India (PEVCAI), said there was strong interest on India among private equity funds both in India and abroad. PE funds invested $10-$11 billion in various Indian companies during 2014-15.

Published on April 09, 2015
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