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A Study On Private Equity in India

This document discusses private equity in India. It begins with defining private equity and describing the business cycle and market structure of private equity. It outlines the different stages of financing - from seed/start-up stages to later stage financing options like bridge financing, PIPE deals, and leveraged buyouts. It then covers private equity valuation methods and regulations governing private equity in India. Finally, it provides an overview of the current private equity landscape in India related to fund raising, deal making, portfolio management, and exits.

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Prabakar Natraj
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288 views21 pages

A Study On Private Equity in India

This document discusses private equity in India. It begins with defining private equity and describing the business cycle and market structure of private equity. It outlines the different stages of financing - from seed/start-up stages to later stage financing options like bridge financing, PIPE deals, and leveraged buyouts. It then covers private equity valuation methods and regulations governing private equity in India. Finally, it provides an overview of the current private equity landscape in India related to fund raising, deal making, portfolio management, and exits.

Uploaded by

Prabakar Natraj
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
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A Study on Private Equity in

India
Abinand Sagar Malve
Priyamvada Jha
Rohit Dhanda
Surjeet Singh
Concept Of private Equity
I ssuer Private Equity
Firms
I nvestors
Business Cycle of
Private Equity


Business Cycle of
Private Equity


Business Cycle of
Private Equity


Business Cycle of
Private Equity


Market Structure Of private Equity

Capital provided to inventors or entrepreneurs
to finance the early development of a new
product
Seed
Financing
Early Stage
Product development and initial
marketing
Start-up
Capital to initiate commercial
manufacturing and sales


First Stage
Required financing for young
firms during growth period.
Second-stage
Market Structure Of private Equity
Financing the expansion of growth companies.
Third-stage
Last financing round prior to an initial public offering of a
company
Bridge financing
I nvestments in unregistered (restricted) securities of a
publicly traded company, usually at a discount
PI PE deals
Buying of a company or single asset is purchased with a
combination of equity, plus, significant amounts of
borrowed money
Leveraged Buyout
(LBO)
the incumbent management team (that usually has no or
close to no shares in the company) acquires a sizeable
portion of the shares of the company.
Management Buyout
(MBO)
Market Structure Of private Equity
Private Equity Valuation
Private Equity analysts value a company based on its earnings, cash
flow or assets.
For valuation, a measure of value is calculated based on the
characteristics of the company, for e.g.- multiple of the earnings

Post Money
Value=PV(Exit
Value)
Post Money
Value
Pre Money
Value=POST-
I nvst.
Pre Money
Value
F=I nvst./POST
Fraction of
VC ownership
Private Equity Valuation
Share(VC)=Share(Founder)(F/1-F)

Price=I NV/Share(vc)
Private Equity Valuation

Future price = $40million
I nvestment = $5 million
Entrepreneurs = $1 million Share
Discount = 40%
Regulation
SEBI (Venture Capital Funds)
Regulations, 1996
Restrictions on I nflow of
Foreign Private Equity
Prudential Regulations for
private equity
Overview of current situations
Fund- raising
Deal making
Portfolio management
Exits
Overview of current situations
Fund raising
Deal making
Most deals continue to be for minority stakes;
however, majority stakes are predicted to become
more popular
I nvestments
By Stage By I ndustry By Region
Portfolio management

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