1131 | Private Equity and Venture Capital Financing

This course will introduce students to the practice of Private Equity (PE) and Venture Capital (VC) deal making in India. In particular, the focus of the course will be on: (a) legal structuring and documentation relating to fund-raising by PE/VC funds from LPs and portfolio investments by PE/VC funds; (b) regulations applicable to setting up domestic PE/VC funds in India; and (c) the regulatory considerations applicable to offshore PE funds investing in India.

This course will cover discussions of the following regulatory regimes to the extent they apply to PE/VC formation and investments in India: AIF regulations, provisions of the Companies Act, 2013 and applicable rules thereunder, beneficial ownership restrictions, merger control/combination regulations under the Competition Act, 2002, foreign exchange control laws of India, SEBI’s takeover code for investments in listed companies, and other applicable RBI and SEBI regulations. Discussions on Companies Act, 2013 and Foreign Exchange Management Act, 1999, in the course, would also cover certain foundational aspects that will help students in developing a solid conceptual base to understand the workings of other applicable regulations to PE/VC deal making in India.

In addition, we will be discussing, in detail, key concepts under PE/VC transaction documents (including concepts relating to choice of securities, governance rights, deal protection terms, participations rights, liquidation preference, redemption, exit options, anti-dilution clauses, conditions precedent, completion actions, long-stop, interim operating covenants, conditions subsequent, representations, warranties, indemnities, damages, material adverse change clause, limitations of liability, monetary and time caps, baskets and deductibles, disclosures, materiality and knowledge qualifiers, etc.).

PE/VC deal making involve many legal issues which affect deal-structuring, commercial considerations, completion timelines, parties’ responsibilities, risk identification and risk allocation among the transacting parties, etc., and this course, through in-class exercises and discussions, would endeavour to provide students with an insight into how PE/VC deals are structured and implemented in practice, using contractual tools at our disposal but, nevertheless, always within the ambit of the constraints and opportunities presented to us by applicable law.

This course will help students explore: (a) the opportunities and constraints created by the laws applicable to and contractual tools used in PE/VC investments in India (i.e., the pros and cons of the different permissible approaches); (b) key concepts under transaction documents relating to fund formation, fund raising and portfolio investments by PE/VC funds; (c) specific issues relating to cross-border PE/VC investments in India; and (d) contractual tools available to the parties to identify legal risk, allocate that deal risk and take steps to mitigate or allocate those legal risks among transacting parties.