A Noteworthy presentation laying out basics of private equity as a source of capital enabling aspiring women entrepreneurs to nurture their fledgling business- By Mr. Ranjeet Kulkarni, Sr Consultant, GDA Management Consulting Pvt Ltd. Pune
3. Money Capital/Finance/Basic force to turn on and keep
running, the business.
Capital / Equity Borrowed Money
- Internal -External
- No fixed cash outgo every year -fixed repayment schedule
- e.g. Owner’s capital, - e.g. Term loans from Banks
Quasi equity in the nature of loans Debentures etc.
from Relatives etc.
Introduction
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Money
PRIVATE EQUITY= EQUITY/DEBT
4. PE in finance is an asset class consisting of equity and debt securities in
companies that are not publically traded on any stock exchange.
Direct investment by an investor in the company with specific set of goals
for which the funds are to be utilised.
Purpose of Private equity
Nurture expansion,
Development of new-product or
Restructuring of company’s operations, management, or ownership
Private Equity (PE)
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Pre- requisites
An Equity Funding raised through Private Markets and Private Placement is known
as ‘Private Equity'. Thus, in such funding the Investors are not from Public
markets. Pre-requisites of private Equity Funding:
1. SEBI registration of the Fund & Investor;
2. Investee should be a registered Company under ‘Indian companies act, 1956.
3. The RBI regulations have been complied with respect to sectoral guidelines.
7. Long term Capital for Company’s Growth
Increased visibility with Bankers, Suppliers, Clients
A partnership; Sharing risk and rewards
Adoption of high performance management standards
Strategic, Operational and Financial Support
Assistance owing to Investors’ network of Contacts and portfolio of investments
Advantage- PE
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8. Indian companies signed as many as 655 Private Equity deals totalling USD10.68
billion in 2013; 12 % increase than 2012. (USD10.68 billion in 2013 than USD9.5
billion in 2012).
Sector wise no of deals
Information technology attracted 210 ,
Consumer discretionary (152 Deals)
Financials (99 Deals)
Health care (73 Deals)
Industrials (60 Deals)
Sectors attracted Private Equity firms to invest worth USD 2771 million
Consumer discretionary (USD 1,812 million)
Information technology (USD 1,642 million),
Health care (USD 1,264 million) and
Telecommunication services (USD 1,264 million).
Some Statistics
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9. No Security
No Personal Guarantee
No Interest Obligations
No Fixed cash outflow every year
Expectations of High returns on equity
Financial and operational Discipline
Intervention in Overall Management
The Trade off
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10. Process of PE
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Identify need for PE
Appointing PE
Advisors
Preparation/Evaluat
ion of Business Plan
and Valuation of
Business
Deciding the Capital
Structure
Approaching PE
Investor- initial
Enquiries
Due Diligence
Final Negotiation
and Completion
Monitoring
Exit
11. Investee Company
PE Investors/PE Fund
Investment Advisors/Investment Bankers
Due Diligence Agencies
Legal Agencies
Internal Auditors
Parties to PE Investing
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12. Are you prepared to take responsibility of
being an entrepreneur? - to run a organised
business;
-to delegate responsibilities to a team and
knowhow to motivate them,
-to take on the legal responsibilities
-- in short, to take a plunge?
Are you prepared to give up a part of your
Company’s capital to a private equity
investor?
Does your business operate in a growth
market?
Are your Company’s development
prospects sufficiently ambitious?
Does your company have a certain
technological or competitive advantage that
can be developed or exploited?
Is Private Equity right for your
Business
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What is the PE Investor looking
for?
Quality and stable management
team – capable of turning goals into
reality?
Solid management procedures
Transparent legal structure
High growth, Competitive products
and services
In case of disposal or transfer, loan
capacity and recurring profits
13. Time taken to raise PE- 5 to 8 months
Costs involved
For Investment Advisor- anywhere between 2% to4% of equity to be raised
Payment to Due Diligence Agencies- A lumpsum fee
Payment to Legal Agencies
Raising of PE is just the beginning not the end
Negotiation is the key word.
Relations with the Investor will matter
Other factors
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Prepare a Business
Plan
Find a PE Investor
Accelerate the Growth
of your Business
14. Consulting arm of the prestigious Chartered Accountancy firm G.D.Apte & Co.
Chartered Accountants
Presence of 8 decades through the firm
Involved in several mergers, acquisitions, valuations, due diligence assignments,
debt and equity syndications
Team comprising Chartered Accountants, MBA’s, Lawyers, Company Secretaries,
Ex-Bankers
Profound understanding of Businesses across sectors and sizes and their financial
needs.
An all pervasive solution for raising of Equity Finance .
About GDA Consulting
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