Recording Private Equity
There is a burgeoning debate of the purpose behind private equity, a common misconception to treat private equity separately from foreign direct investment (FDI). The difference is blurred on account of private equity not entering the country through the stock market. Private equity generally flows to unlisted firms and to firms where the percentage of shares is relatively smaller than the promoter or investor held shares (also known as free-floating shares).
The main point of contention behind differentiating private equity from FDI is that FDI is used solely for production whereas in the case of private equity the investor can reclaim their money after a revaluation period and make speculative investments in other financial assets.
Presently, most countries report private equity as a part of FDI.
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