As the global tally of COVID-19 cases rises steadily, the pandemic has proven to be an unprecedented public health emergency of our time. With nations enforcing social distancing, lockdowns and travel restrictions, the global economy has witnessed a drastic downturn. Closer to home, in India, RBI has warned of a growth slowdown, and the capital markets have slumped. Private equity investments in the country have taken a hit, and the pandemic has caused investors to reassess new and existing investments.
Given the likely economic aftermath of COVID-19, key issues that have come to the forefront are: (a) whether COVID-19 constitutes ‘material adverse effect’ or ‘material adverse change’ (hereinafter, referred to as “MAE”) under existing agreements; and (b) with the economic uncertainty in the backdrop, the manner in which price or value of new deals can be accurately determined, going forward. This post sheds light on the abovementioned issues and chalks out ways to redress the same.
Continue Reading Private Equity In A COVID-19 World: Assessing The Impact Of The Pandemic On PE Investments In India