“Increasing private investment is critical to achieving the $5 trillion target. To stimulate such investments, fundraising activity should resume,” Tyagi said. While fundraising through IPOs has declined, companies have raised equity through other means, such as rights issues. A recent example of two companies that have signed such an agreement is Glencore plc, a Commodities trader based in Switzerland, and Bunge Ltd, an American agricultural commodities trader. In May 2017, Glencore took an informal step to buy Bunge. Shortly thereafter, the parties agreed to a status quo agreement that prevents Glencore from accumulating shares or making a formal offer for Bunge until a later date. A status quo agreement is for a contract that contains provisions on how a bidder in a business can buy or sell a share of the target company. It can effectively delay or stop the process of a hostile takeover if the parties fail to reach benevolent agreements. It allows the contracting parties to maintain the status quo on a particular issue. Meanwhile, at Thursday`s FICCI conference, Tyagi said that if India`s economy reaches $5 trillion by 2024-25, fundraising should accelerate. Fundraising through IPOs has been slow this year, due to the lack of companies amid volatile capital markets and a slow economy. The Essel Group had mobilized funds for its infrastructure activities. However, in the context of defaults by large infrastructure lenders IL-FS, which have gone bankrupt, companies such as Essel Group are finding it difficult to refinance debt.
On 27 June, Sebi rejected the status quo agreements and announced that in the event of default in cases where loans against shares in business promoters had been taken out, measures against investment funds had been taken. The agreement is particularly relevant because the bidder would have access to the confidential financial information of the entity concerned. After receiving the commitment of the potential purchaser, the target entity has more time to set up additional defence facilities for the acquisition. In some situations, the target entity agrees to repurchase shares of the target with a premium in return for the potential purchaser. A status quo agreement can be reached between governments for better governance. While open investment fund systems generally have flexible repayment periods, closed systems have strict deadlines for closing funds related to the maturities of non-transferable companies or other obligations in which the system has invested.