When Valiyil Korath Mathews signed the final contract closure in Trivandrum, it brought in Rs 242 crore of private equity into IBS, a travel logistics software company relatively invisible on the national radar. More importantly, it signaled that the long arms of private equity had reached the farthest corners of the country.
Not a day passes without newspapers screaming their heads off about yet another multimillion dollar private equity investment being made into a virtually unknown Indian company by an even more unknown PE fund. The numbers are mindboggling to say the least.
What do these investments mean? Are they for real, or are they gold at the end of the rainbow? Where do they come from? How can the company you have built get a share? And more important, is there a catch hidden in the proverbial pot of gold? These are the questions we will answer in this piece as we go behind the scenes to unravel the wonder world of private equity.
What is Private Equity?
So, what exactly is private equity? As the words denote, it is equity investment into a privately held company. Typically these are investments by organisations rather than by individuals. While the investor is looking for higher than market returns in quick time, the company is looking for large amounts of capital to fund expansion and growth. The fund requirements would typically be too large and the risks may be high to take the loan route. The company may also not yet be ready to go public. Private equity investments are typically against a minority stake (and a seat on the board).
The PE fund can be considered to be a serial investor, who is making a short-term investment in an established company.
Angel, Venture or PE?
Private investment into the equity of a company can come from three routes, Angel investment, venture capital and private equity. Each of these come at different stages of growth of an enterprise and differs in scale of funds, type of investor and involvement and role of the investor.
Angel investment comes first, in the earliest stages of the formation of a company. Angel investments are typically low in value and come from individuals rather than investing organisations. The angel investor also plays the role of the mentor for the budding entrepreneur and his newly formed enterprise.
An Angel typically finances the gap in startup capital; the gap between what an entrepreneur can organise on his own and what is required to start off. Since the Angel comes in at the earliest stages, the investments are the lowest while the risks are the highest.
The next stage in third party equity capital is venture capital. There is a significant convergence between Angel funding and venture capital, with both coming at the early stages of the company. Venture capital typically associated with higher levels of investments in startups, could come from individuals or from funds. More likely they are from venture funds.
Private equity comes once a company has established itself and is looking to fund rapid expansion. This means that PE funds look for companies that are older, may be even ones that have passed through generations and have higher valuations. PE funds pay a higher value for a minority share in the company. In a growth market, the dividing line between venture and PE gets blurred. Now, that raises the question: Should you look for venture funding or should you opt for private equity?
According to Alok Mittal of Canaan Partners, there are various ways to look at it. One way is to look at what kinds of risks are taken by the investor. “When you see a lot of concept and market risks that tends to be more venture. When you see growth or finance risk, it tends to be more towards PE.”
According to him, another way to look at it is the stage of the company. “Early stage investments are more venture. Then there is the time horizon. Venture tends to be more 4-6 years time horizon of investments. PE tends to be more short time. Size of investments could also be an indicator. PE funds tend to do larger investments, because they are investing in late stage companies. Venture tends to make smaller ones”. Like we said before, PE typically is a minority stake. But there are variations.
In the real estate industry, we found that the preferred model is to set up a joint venture or a special purpose vehicle (SPV) for a specific project rather than to invest in the mother company. Om Choudhry, whose FIRE capital deals exclusively in real estate PE, prefers project-specific joint ventures with equal share for FIRE and the promoter, and a more active involvement, particularly in the early stages of the project.

Who can get PE?
The blasé answer is that any established company with a viable plan for major growth can get private equity funding. If you happen to be in one of the growth sectors of the economy, then the going just got better. But in reality it is slightly more complex. Each fund has its preferred sectors, and within the sectors, they would have identified growth areas or areas that they have specific expertise in. Within these segments, they look for companies that can outperform the market in the short term.

Subbu Subramaniam of Baring Private Equity explains the process, “We actually run through a top-down analysis, as we call it. If the economy grows at 8%, which sectors will grow faster than the others? If these sectors are projected to grow at say 10-12%, which companies in that sector will grow faster than that? For instance, if you take automotive over a long term, it grows at about 1.5 times GDP. However, if you take the leader in automobiles, it can grow almost 1.5 times of the sector itself, which means 2.25 times the GDP. We try to identify companies for investment in this manner”

written by ganesh kumar, August 21, 2011
written by ashfaq ahmed, August 16, 2011
preferred text verbiage as been approved by their bankers. We also proffersales
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written by Ashfaq Ahmed, June 09, 2011
preferred text verbiage as been approved by their bankers. We also proffersales
option to interested buyers. Our terms and procedures are so flexible and
workable by RWA clients. Our lease rate is (5.5+0.5)%+x%. X% IS Lesseebroker's
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BG and Put you into PPP Trading.
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written by Ashfaq Ahmed, May 16, 2011
preferred text verbiage as been approved by their bankers. We also proffersales
option to interested buyers. Our terms and procedures are so flexible and
workable by RWA clients. Our lease rate is (5.5+0.5)%+x%. X% IS Lesseebroker's
Commission and he determines his commission. Also we have facilities todiscount
BG and Put you into PPP Trading.
Contact me through this
email;
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gmail.or through
skype: (AshfaqAhmedforyou) in other to furnish you with other information
written by MUKUND, March 27, 2011
written by .William Brownlie A., March 16, 2011
Thank you
Mr.William Brownlie A.
Individual/Angel investor
Contact email: williamalabrowlie@yahoo.co.uk
written by Jubril, March 14, 2011
written by Jeykrishnan, March 04, 2011
PLS CONTACT US: jeykrishnan@gmail.com
mobile: (0)9500604267
written by Jeykrishnan, March 04, 2011
I can get you private equity fund,
contact me : jeykrishnan@gmail.com
mobile: (o)9500604267
written by vigil kanethara, February 26, 2011
with regards,
vigil kanethara
written by alexey lapsin, February 03, 2011
Dear Sir,
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written by muhsin ali, January 29, 2011
preferred text verbiage as been approved by their bankers. We also proffer sales
option to interested buyers. Our terms and procedures are so flexible and
workable by RWA clients. Our lease rate is (5.5+0.5)%+x%. X% IS Lessee broker's
Commission and he determines his commission. Also we have facilities to discount
BG and Put you into PPP Trading.
Contact me through this email:(financialinstruments01@gmail.com) or through
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written by Edwin Robert finacial firm, January 15, 2011
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any other AA rated Bank in Europe, Middle East or USA.
contact : Mr Dennis Clark through our direct
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email: dennisclark02@live.co.uk
All inquires to Mr Dennis should include the following minimum information so I can quickly address your needs:
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written by Satish Sahasrabudhe, December 04, 2010
written by Satish Sahasrabudhe, December 04, 2010
written by graham duke, November 28, 2010
We are direct providers of Fresh Cut BG, SBLC, MTN, Bonds and CDs which we have specifically for lease. We do not have any broker chain in this offer or get involved in Chauffer driven offers. We deliver with time and precision as Seth forth in the agreement. You are at liberty to engage our leased facilities into trade programs as well as in signature project(s) such as Aviation, Agriculture, Petroleum, Telecommunication, construction of Dams, Bridges and any other turnkey project(s) etc.
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written by Elton32, November 26, 2010
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written by intraday tips, November 19, 2010
written by John Maltese, November 16, 2010
During the last several months we had introduced our program to several OEM’s for Electric Vehicle Programming. Our plan will launch during the next 9 months, with an objective of acquisition or IPO to expand into national markets with a performance model exceeding $187 million in sales. We may create 1,000+ Jobs at full scale.
Our objective is the support an EV Program and new energy Initiative. If this is of interest, please reply with comments and availability for a scheduled meeting. Previous lending experience or a qualified lending application to be evaluated for approval for SEC compliance and regulations.
Outline to be discussed:
• Revenue Building Model for Electric Vehicle
• Multiple Alliance Verticals, (Corporate & Government)
• Clean Energy Initiatives, (Innovation)
• EV GRID INFRASTRUCTURE - 3 Year Development
• Regional & National Expansion
• Capitalization may vary Based on Scope of Implementation.
Funding requirement to $2 million; 2nd Round Financing is pre-approved from $2 - $6 million.
written by Pradeep Kurup, November 11, 2010
Thanks in advance
Pradeep
written by james walter, October 30, 2010
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written by v.c.sekaran, October 27, 2010
written by Mathews, October 24, 2010
Exit plan 3 years
written by Amar Prasad, September 09, 2010
Now Indian govtallows 100% investment in both of these areas.
written by Amar Prasad, September 09, 2010
written by raj kumar swain, August 11, 2010
thanks
written by Suresh Bari, August 08, 2010
written by Suresh Bari, August 08, 2010
Thanks
suresh
written by s raja, August 07, 2010
written by M.Raju, July 16, 2010
written by Nalini, July 05, 2010
Kindly send us the details.
Email : train.ind@gmail.com
written by Sunil Shah, July 05, 2010
Other projects in Solar and real estate.
sunil Shah - seaforthfinance@gmail.com
written by John Maltese, June 28, 2010
New Vehicle Technology, offer for high value investment opportunity along the Eastern Seaboard. More than $45 mio in equity resulting from auction award. Green initiation for Transportation, Strong Warehousing and Retool for MFG - targeting the (EV) market and other green transportation supporting services. (100+/-) acres, XX Mil SqFt Plant.
(To Support) a Purchase Order Option of 5000 units and New Rail to plan to 2015.
Initial JVP to $5 mio, Several discussions from Mahindra, BYD, Toyota, Mazda, etc.
If this is of interest reply, referral commission available.
info@mqmconsult.net - John Maltese
written by Ahsan Hassan, June 04, 2010
Attorneys
info@ahsanhassan.org
www.ahsanhassan.org
written by Ahsan Hassan, June 04, 2010
Our firm is in a position to arrange funding for your business through a committed Sovereign Wealth Fund, from the MENA region.
The investment package already endorsed by MIGA is US$ 980,000.00.
The incentive is open to all companies operating at all stages of development i.e. from pre incorporation to expansion.
Should you or your company wish to have further information please visit.www.miga.com/recent or send us an email with the following enclosed:
1.Company Profile.
2.Profile of at least 1 Director.
3.Business Plan of Venture.
4.Executive Summation of Business Plan.
5.LOI (Letter of Intent).
Our firm would appreciate to be of relevance and service to you.
Thank you.
Ahsan Hassan.
written by Pallavi Parmar, May 02, 2010
We are a investment banking company and can assist you in raising this Private equity through Indian or foreign investors or through external commercial borrowings. Pl contact me at lawyer.pallavi@gmail.com
Thanks
written by S.P.SHARMA, April 25, 2010
TEGARDS.
S.P.SHARMA
written by Kate, April 23, 2010
Fun ... something new
Looks like I was a little
time to keep up with life.
ambienbuy.net
written by Ranjan, April 09, 2010
We are a German JV in India and distributing the products made by them. The German Co. is a leading company, world-wide in its field. The products have had a tremendous response in India. We now have tie ups with all leading departmental stores in India. We are looking for a VC with a investment of 15-20 million Rs. in 2 stages to fund our expansion plan. The funding is required by the Indian partner in the JV. Details can be provided on request.
written by Mukesh Lalwani, March 24, 2010
written by Indalytics Advisors, February 17, 2010
we provide valuation services to startups and other companies, which help them to pitch for VC/PE funding. We also draft business plans.
Please feel free to contact us if you need any further information.
www[DOT]indalytics[DOT]com
written by kalpesh maniar, February 03, 2010
I Need Funding, you have mentioned that you will fund any project that can generate 10% return, I have very attractive project that I would like to discuss, you are invited to contact me on +919221272830, alternately please give me your contact details so I can contact you.
Regards
Kalpesh
written by Ahmed Wardi Bin Zahari, January 28, 2010
We will like to be a financial partner in your business transaction.
More so, we are ready to facilitate and fund any business
that is capable of generating 10%
annual return on investment(AROI).JV partnership and loan financing can also
be considered.
Send us a brief summary of your project. If we consider it suitable for
funding, a request for additional information will be requested from you.
As a corporate entity, it is important that we determine the specific of
your funding requirements and be of assistance to you by offering you our
lending efforts.
written by saed mohamed, January 28, 2010
saed mohamed
+256701942942
saedheart256@yahoo.com
kampala,uganda
written by Shinto Thomas, January 18, 2010
written by rags, January 14, 2010
Loaded With orders the company now needs support of private players.
Any one interested please contact us via mail on raghavkalra@hotmail.com
written by rags, January 14, 2010
Loaded With orders the company now needs support of private players.
Any one interested please contact us via mail on raghavkalra@hotmail.com
written by Chris Regan, June 22, 2009
written by neerav sharma, April 28, 2009
written by neerav sharma, April 28, 2009
written by Shyam Agarwal, January 22, 2009
written by thomas o connor, January 13, 2009
written by JL Mealer, January 13, 2009
As we were accpeted by a major platform group last year, they have since dropped the funding group and bounced every developer out of the queue.
Where to now? I will resurrect the US economy and the world will follow.
Try me. Contact me. Any ideas?
written by Ashish Apte, December 29, 2008
Company also interested in selling stake upto 50% to a larger MNC or Indian player with complementary products
Pl contact: Ashish- 00 91 9822624797
written by Ken, November 02, 2008
B Venugopal can you provide me with more information abot your biz.
written by Shrikanth, October 07, 2008
I been following DARE for quite some time and I believe It would help me tp find an Angel to fund my business. I am looking for some to fund me for my recently venture in food business. We aim to make it the "THE NEXT BIG THING IN INDIAN FOOD BUSINESS". The only problem with us is that "we think only big, we are extremely passionate about Food & Beverages..We can and we will make a difference..Just looking for some funding....
Any info about where and how to find a AI OR VC will be highly appreciated
Any one please contact us shrikanth20@gmail.com. Thank you DARE..
I DARED because entrepreneurs do...
written by B Venugopal, September 20, 2008
written by LC TOLANI, August 15, 2008
my co. web site is www.pragyaequipments.com
Interested,organisations please contact
L C tolani
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