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Means of Private Funding

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    Means of Private Funding Means of Private Funding Presentation Transcript

    • By Pavan Kumar Vijay MEANS OF PRIVATE FUNDING
    • SPECTRUM OF FUNDING OPTIONS ! ! ! ------------------------------------------------------------------------- ------- Preferential Allotment Private Equity Venture Capital ------- -------
    • BENEFITS
      • Improvement and development of business and strategies.
      • Enhancement of Brand Image of the Company.
      KEY CONCERNS
      • Close monitoring of Funds
      • Board Nomination
    • PRE REQUISITES FOR ATTRACTING PRIVATE FUNDING
      • Good Management Team,
      • Well defined Business Model,
      • Competitive Positioning,
      • Strong Cash Flows,
      • Attractive Entry Price
      • Exit Opportunity to Investor,
      • High Returns to Investors
      • Sound Past Performance
      • Business Growth Strategies
    • PREFERENTIAL ALLOTMENT
    • Simple way to raise capital of the Company Economical way to raise capital No need to appoint Merchant Banker PREFERENTIAL ALLOTMENT (except in case of allotment to QIBs )
      • Equity Shares
      • Any other security Convertible into Equity Shares.
      • Like: Warrants, Fully Convertible Debentures, Partly Convertible Debentures, Convertible Preference Shares.
      SECURITIES THAT CAN BE ISSUED ON PREFERENTIAL BASIS :
    • The Companies Act, 1956 SEBI (Disclosure and Investor Protection) Guidelines, 2000 (Chapter – XIII & XIIIA) Unlisted Public Companies (Preferential Allotment) Rules, 2003 SEBI (SAST) Regulations, 1997 LAWS GOVERNING PREFERENTIAL ALLOTMENT Listing Agreement
    • PROPOSED ALLOTTEES Allotment to QIBs (not in Promoter Group) by companies listed on NSE / BSE. OTHERS Chapter – XIIIA of SEBI (DIP) Guidelines Chapter – XIII of SEBI (DIP) Guidelines
    • Time Line- Preferential Allotment Relevant Date 30 days General Meeting (10.05.2006) Filing of application of in-principal approval Despatch of Individual Notices 25 days 15 days (12 months in case of QIBs) Board Meeting Allotment of Shares Shareholders’ Resolution must be implemented within 15 days ( 12 months in case of QIBs) except in case of pending regulatory approvals
    • Pricing Schedule General Meeting 10.05.2006 Relevant Date 10.04.2006 30 days 2 weeks 6 months (26.03.06- 09.04.06) (10.10.05- 09.04.06)
    • Lock in Requirements QIBs Others Existing Holding Preferential Allotment Existing Holding Preferential Allotment No Lock in For One Year, except in case of Trading through Stock Exchange For Six Months PROMOTERS – 20% of Total Capital - for 3 Years Remaining – for one Year OTHERS – For One Year
    • Currency of Security Convertible into Equity Shares QIBs OTHERS FCDs/ PCDs/ any other convertible Security –60 Months from the date of allotment Warrants convertible into Equity Shares – can’t be issued to QIBs FCDs/ PCDs/ any other convertible Security –No time prescribed for conversion Warrants convertible into Equity Shares - 18 months from the date of allotment
    • Preferential Allotments: 2000-01 to 2006-07 Source: www.primedatabase.com YEAR No. of Issues Amount (Rs. Crore) 2000 - 2001 335 12330 2001 – 2002 243 4640 2003 – 2003 313 1912 2004 – 2005 1180 1745 2005 – 2006 4428 6966 2006 – 2007 8742 6974
      • HESTER PHARMACEUTICALS LTD.
      • ZYDEN GENTEC LTD.
      • SSI LTD.
      • SICAL LOGISTICS LTD.
      • GEMINI COMMUNICATIONS LTD.
      • VISTA PHARMACEUTICALS LTD.
      • CLUTCH AUTO LTD.
      • SUJANA UNIVERSAL INDUSTRIES LTD.
      • ANG AUTO LTD.
      • Source: BSE Website
      RECENT PREFERENTIAL ALLOTMENTS
    • VENTURE CAPITAL
    • VENTURE CAPITAL risk capital necessary to Kick-start a business idea into a commercial reality money provided by professionals who invest in young, rapidly growing companies
    • In accordance with SEBI (Venture Capital Funds) Regulations, 1996, VCF means: fund established in the form of a trust or a company Registered under these Regulations has a dedicated pool of capital raised in a manner specified in the regulations invests in accordance with the regulations VENTURE CAPITAL FUND
      • High net-worth individuals with appetite for high risk / reward paradigm
      • Institutions diversifying investment portfolios – Insurance companies, pension funds, banks, etc.
      • Funds of funds
      • Governments acting as catalysts
      Venture Capital Investors
    • Venture Capital: A Boon Resource for supporting innovation, knowledge based ideas, technology and capital intensive enterprises Critical financial Support for idea based enterprises not available from banks and institutions High risk / high return finance combined with hand holding
    • Venture Capital Investment Trends in India Source: IVCA/AVCJ
      • IT and IT-enabled services
      • Software Products (Mainly Enterprise-focused)
      • Wireless/Telecom/Semiconductor
      • Banking
      • PSU Disinvestment
      • Media/Entertainment
      • Bio Technology/Bio Informatics
      • Pharmaceuticals
      • Contract Manufacturing
      • Retail
      TARGET INVESTMENT VISTAS FOR VCFs
      • Rural, Retail & Finance
      • Wi-FI/ Wireless
      • KPO
      • Clinical Research
      • Health Tourism
      • Food Processing
      • Contract R&D
      • Chip Design
      • Multiplexes
      • Gaming
      • Security Systems
      • Wine
      • Alternative Energy
      • R&D Ventures
      • Web Initiatives
      EXISTING UPCOMING
    • NEGATIVE LIST FOR VENTURE CAPITAL FUND:
      • Non Banking Financial Services (excluding NBFCs registered with RBI and categorized as Equipment Leasing or Hire Purchase Companies)
      • Gold Financing (excluding companies engaged in Gold Financing for jewellery)
      • Activities not permitted under Industrial Policy of Government of India.
      • Any other activity which may be specified by Board in consultation with Government of India from time to time.
    • PRIVATE EQUITY
    • Private Equity Investment High Growth perspectives Focus of Private Equity Investors: Global Competency Competitive Edge
    • PRIVATE EQUITY PROCESS Total time taken for PE deal is 10 to 14 weeks
      • Issuance of Mandate
      • Preparation of Information Memorandum
      • Investors’ Marketing and Presentation
      • Meetings with Investors
      • Preliminary Term Sheet / Letter of Intent
      • Negotiations and Finalisation of Term Sheet / Letter of Intent
      • Due Diligence by Investor
      • Sign Up of Share Purchase Agreement
      2-3 weeks 2-4 weeks 4-6 weeks
    • Sectors for Private Equity Investment…
    • Real Estate
    • Infrastructure
    • Financial services
    • Logistics
    • FMCG
    • Specialty Chemicals
    • Retailing
    • Life Science / Pharma
    • Manufacturing Engineering
    • IT & IT Enabled Services
    • Auto Ancillaries
    • Textiles
    •  
    • THANK YOU