Study is all about finding the factor which affects the private equity investment in india and prefer sector for it along with the process of investment

1. Factor affecting Private
Equity in India
Presented by:
Hadia Lakdawala
Vinay Singh Tomar
Twinkle Shah
Presented to:
Prof. Mittal Dattani
Center for management
studies
Ganpat University

2. Flow of presentation
 Introduction
 Literature review
 Research methodology
 Analysis
 Findings
 Conclusion
 Bibliography

3. Introduction
 Private equity is capital that is not noted on a public exchange.
Private equity is composed of funds and investors that directly invest
in private companies, or that engage in buyouts of public companies,
resulting in the delisting of public equity
 Private equity comes primarily from institutional investors and
accredited investors, who can dedicate substantial sums of money for
extended time periods.

4. Types of Investment in Private Equity

5. History of Private Equity
 Venture capitalists often relate the story of Christopher Columbus.
In the fifteenth century, he sought to travel westwards instead of
eastwards from Europe and so planned to reach India. His far-
fetched idea did not find favor with the King of Portugal, who
refused to finance him.

6. History of Private Equity
 Finally, Queen Isabella of Spain decided to fund him
and the voyages of Christopher Columbus are now
empanelled in history.
 The founder of ARD (American Research and
Development Corporation ) was General Georges
Dariot, a French-born military man who is considered
"the father of venture capital

7. Private Equity in India
 The first origins of modern Venture Capital in India can be traced to the setting
up of a Technology Development Fund (TDF) in the year 1987-88.
 The first phase was spurred on soon after the liberalization process began in
1991. Government had recognized the need for venture capital as early as
1988.
 That was the year in which the Technical Development and Information
Corporation of India (TDICI, now ICICI ventures) was set up, soon followed by
Gujarat Venture Finance Limited (GVFL).

8. Private Equity in India
 In 1996, the Securities and Exchange Board of India (SEBI) came
out with guidelines for venture capital funds has to adhere to, in
order to carry out activities in India.
 This was the beginning of the second phase in the growth of
venture capital in India.
 The Indian Venture Capital Association (IVCA), is the nodal center
for all venture activity in the country. The association was set up in
1992 and over the last few years, has built up an impressive
database.

9.  Funding Risk
 Liquidity Risk
 Market Risk
 Capital Risk
Risk in investment in Private Equity

10. Factor influencing Private Equity Investment
 Profile of the Respondents' Firms
 Size of the Firm in which investment is to be made.
 Growth Potential of the Product in the Market
 Expected Returns against investment
 Valuation of Firm

11. Factor influencing Private Equity Investment
 Management
 Past Success
 Expertise in their field
 Assurance
 Regulatory Framework

12. Literature Review
 For our Literature review we have selected 95 research papers
which are further categorized in 3 different segment
 18 papers defining Private Equity Investment
 37 papers Factor Affecting Private Equity Investment Decision For
Individual Investor
 40 papers Factor Affecting Private Equity Investment Decision For Fund
Managers

13. Research Methodology
Primary Objectives:
 This research focused on number
of factors that highlights the
factors which the private equity
investor keeps in mind while
taking decision about investing
in any of the venture.
Secondary Objectives
 To analyze the factors which
affect the perception of
investor
 To investigate the factors that
influences the private equity
investor’s decision while
investing the funds.

15. Model for Private Equity Investment
 Their are 2 models in this research which helps us to
determines what factors affect the individual investor and
fund managers for taking the investment decision for
private equity.

16. Factors considered
by individual
Risk and
retruns
Entry and
Exit
barriers
Past
experience:
Legal
Framework
Management
of the
companyFinacial
condition
of the
company
Economic
Factors
Nature of
investment
Growth
rate
other
Factors

17. Factor for
Investment
decision of
Fund Managers
Heuristic
Behaviour
Prospect
theory
Herding
Behaviour
Corporate
Governance
Situation of
the capital
market
Finacing
cost
Risk and
return
Finacial
analysis of
any
company

18. Process of Private Equity

19. Company Analysis

20. Finding for Model
 The model here represents the factors which the fund managers
and the individual investor would consider before investing in
any investment.
 The model is mainly comprises of the following : Heuristic
behaviour, Prospect theory, Herding behaviour, Corporate
governance, Situation of the capital market, Financing cost,
Financial analysis of any company. These factors influence the
behaviour of the fund managers for the purpose of investment.

21. Finding for Model
 While the factors that affect the behaviour of individual
investor which is as follows: Risk and returns, Entry and
Exit barriers, Past experience, Legal Framework,
Management of the company, Financial condition of the
company, Economic Factors, Nature of investment,
Growth rate, Other Factors.
 The model helps to analyze the factors which would be
required by the investor for considering the investment

22. Finding for Process
 The process of private equity is consists of 10 steps and the most important
step in this process is the due diligence because this include various checking
on the purpose of the other investment.
 The process of private equity includes the following :
› Signing a Non-Disclosure Agreement (NDA)
› Initial due diligence & Management Presentation
› Deal Alert (first review with Investment Committee)
› Non-Binding Letter of Intent (LOI) or First Round Bid
› Further due diligence with management
› Building an Internal Operating Model

23. Finding for Process
 Preliminary Investment Memorandum,
 Final Due Diligence and process up to submit a binding bid,
 Update and Final Investment Committee Approval,
 Final Binding Bid and Signing.
 The process is simple and it takes a lot of time to execute.

24. Conclusion of Model
 The model helps in identifying the factors for the decision making process
of the investors. These factors are considered by any fund manager before
considering the investment decision. Although for every different
individual different factors are considered by them. This model determines
the factors and helps the individual to take a decision for the purpose of
investment.

25. Conclusion of Process
 This process helps us to understand that how the simple
process of private equity is taking place and how it works. The
process is simple and easy to understand and it comprises of 10
steps and it is a time consuming process as they deeply
evaluate the prospect which comes for the purpose of private
equity.

26. Conclusion of Company Analysis
 Most of the venture firms are investing in Early Stage and Growth stage of
the companies.
 Most of the private equity firm invests in Debt financing, Recapitalization
of Equity structure, Buyouts, Mezzanine and PIPE deals.
 Most the Venture capital firms prefer to invest in Infrastructure , Financial
Services, Healthcare, Consumer and Techno driven companies comprises of
E-Commerce, IoT and Technology

27. Conclusion of Company Analysis
 Most of company investment in the range of USD 5 – 15 Million in early
stage venture capital and some are investment very less i.e. 50 K – 300 K
also.
 Companies register their fund with the Regulatory authorities to make
investment in other companies.
 Every company has their own process in selecting the venture or companies
where they want to invest.

28. Bibliography