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Hedge funds vs PE funds1. Investment horizon: Private equity are typically long term whereas hedge funds are typically short term.2. Control: Private equity funds normally have control over the companies in order to change business strategies, implement governance and make operational improvements. Hedge funds are normally minority shareholders with no control over their investments.3. Exit: Private equity companies often float or sell the stock they own. Hedge funds simply sell their shares on public exchanges.4. Capital flow: Private equity firms have fund-raising cycles every now and then where they raise capital for each fund – they are ‘fixed term’. Hedge funds are Evergreen as they do not have fund-raising cycles and continue to allow new capital on a periodic basis, which can be invested and re- invested until requested back by the investor.
About TVS Capital Funds Ltd• TVS Capital Funds Limited was founded in September 2007 by Gopal Srinivasan of TVS Group• TVS Capital manages the TVS Shriram Growth Fund I which is a Rs.600 crores domestic rupee fund (Scheme 1A) established with a vision to develop and nurture India’s mid-cap businesses into world class companies.• TVS Capital is currently raising funds for the Scheme 1B of the TVS Shriram Growth Fund I to increase its total AUM to Rs. 1000 crores
Investment Strategy – TVS Capital ... invest in disruptive growth opportunities that are at the intersection of "high growth sectors" driven by India’s macro trends and a "developmental theme."The guiding principles of growth by TVS Capital are:• Build deep understanding of the business model.• Invest in businesses with potential for 10 to 15 years of sustainable growth.• Ensure targeted return on investment by operationalizing the full potential model of value creation.• Ensure efficient return on time for the investment team.• Ensure process effectiveness, quick and decisive response to investee companies.• Take risks with deep thought, discrimination and diligence
Engagement Model by TVS Capital
Project expectedEquity Research AnalysisAssist the investment team/Research team in• Searching and compiling prospective unlisted companies in a target sub-sector• Tracking listed market action relevant for the portfolio companies• Summarizing sell-side reports to get key industry insights• Preparing/updating fund presentations• Quick financial analysis (margins/ROCE etc) for target sub-sectors
References• TVS Capital website: o http://www.tvscapital.in• IVCA Bain India Private Equity report 2011• New Forms of Funding in Strategic Corporate Finance: Entrepreneurial Finance, Venture Capital, Private Equity and Hedge Funds by Guido Eilenberger