PRIVATE EQUITY

BY:
Priyanka Agarwal Rakesh Kumar
Priyanka Modi Rashmi Bapna
Ravi Soni
Rahul Arya Rashmi Dhal
Rahul Ostwal Ravi Banga
 CONTENT
 Definition and Evolution
 Types
 PE Fundraising
 Size of Industry and PE Investment
 Problems faced by PE firms
 PE Players and PE Deals
 Exiting the Industry
 Future of PE
 What is PE?

PE (Private Equity) is an asset

class committing of equity
investment in companies that
are not traded on a public stock
exchange.

Duration of investment is 5 to 7
years. And in India it is 3 to 4 years.
HISTORY AND EVOLUTION

Termed in 1946 by ARDC.

Entered Indian scenario in 1989-99.

First Indian deal in 1999 & 2001.

 TYPES OF VENTURE EQUITY
INVESTMENT

Angel Investing.

LBO.
Venture Capital.

Private Placement.

Distressed Debt Financing.

Mezzanine Financing.
 PE FUNDRAISING

PE Fundraising refers to the action of PE firms

seeking capital from investors for their funds.
Fund of funds.
Individual and substantial net worth.
Increase in nos.
Use of placement agents.
Time taken for raising capital.
SIZE OF INDUSTRY AND PE
INVESTMENT
PROBLEMS FACED BY PE FIRMS

 Acquiring management control.

 Higher current valuation.

 Difficulty on big deals.

 Lack of big deals on maturity stage.

 Bureaucracy norms and regulatory limit and

poor infrastructure.
PLAYERS IN INDIAN MARKET

NATIONAL : IDFC PE, BPEP India, UTI Venture,

Kotak, ICICI Venture and Sequoia Capital.

INTERNATIONAL : Carlyle, Blackstone, Matrix

Partners, Barings, General Atlantic, Citigroup,3i and
Chrys Capital.
INVESTMENT IN VARIOUS SECTORS
% OF THE NUMBER OF DEALS BY PE’s IN VARIOUS SECTORS

SECTORS 2000 2003 2006 (Q1 &Q2)

IT & ITES 65.5 49.1 23.18

Financial 3.13 12.3 9.7

Services
Manufacturing 3 1.8 19.3

Medical & 2 7 8.3

Healthcare

Others 25.2 29.8 37.9

TOTAL 100 100 100

 DEALS
COMPANY FUND INVESTMENT (IN
$ MILLION)
Shriram Holdings Newbridge 100

RMZ Group GIC Real Estate Fund 100

Nutrine Confectionary Actis 66.6

Scandent Solutions ICICI Venture 60

ACC (Refractory ICICI Venture 59.8

Business)
Dr. Reddy’s ICICI Venture 56

Carritor CVC International 55

DEALS contd.

COMPANY SECTOR INVESTMEN INVESTOR

T (US $ mn)
Flextronics IT Services 900 KKR
Software
System
India bulls Financial 143 Farallon
Financial Services
Services
L&T Infrastructure 124 JP Morgan
Infrastructure chase, IDFC
Private Equity
GMR Infrastructure 56 ICICI Ventures
Infrastructure
International Tractors 45 3i
Tractors
EXITING THE INDUSTRY
IPO: Warburg Pincus, major US player made investment
worth $ 300 mn in an Indian mobile telephony services
provider Bharti Telecom between 1999-2001. partly sold in
2004 and completely in 2005 resulted in total return of $
1.92 bn, almost 7 times initial investment.

Buyback : Purchasing back the company's stake from

PE firms.

PE to PE deals: Selling stake in a company to another

PE firms and getting returns.

Recapitalization: Changing or restructuring the

company's debt and equity mixture.
 EXIT IN 2007
TARGET BUYER SELLERS ORIGINAL DEAL % OF
INV. ($ mn ) VALUE STAKE
SOLD
Punjab M&M Actis 60 144 28.4
Tractors Capital

ACE IMERYS ICICI 65 136 99

Refractory Ventures

Mars Indian Navis Undisclosed 110 74

restaurant Hospitali Capital
& sky ty Corp. Partners
gourmet

NIIT Orient Intel Capital 10 48 9.4

Global
Exit contd.

TARGET BUYERS SELLERS ORIGINAL DEAL % OF

INV.(in $ mn) VALUE STAKE
SOLD
First Sun Group Sequoia Stock Swap 42 4.45
Source Capital India
Solution
Apollo Fidelity Temasek 7.50 29.70 5.26
Hospitals Investmen Holding
t
Subhiksha ICICI ICICI NA 18 5
Trading Prudential Venture
Services Mutual
Fund
Deccan UBS ICICI NA 7 3.25
Aviation Securities Venture
 ROLE OF PE MANAGER
 Active managers who follow aggressive
growth strategies.
 Acquire controlling stake in company.

 Work closely with management.

 Focus on company to make it more valuable.

 Do more than just bringing in capital.

 Bring in best practices to the target

companies.
How long will they last????????

At present high rate of return to the investors.

Future expectation about returns.

Regulation and the system.

Staying alert and action.

Thank You