Private Equity Funds Decrypted

Let’s start out by stating that this blog is not for people with a keen insight on all sorts of financial practices, but for the layman who’s void of any knowledge about all things financial.

Now, coming to the topic of discussion; one might have often come across the term ‘private equity fund’ and wondered what in the world it refers to. For those of us who aren’t quite clued into the inner workings of the economy, words like ‘private equity’ and funds in Real estate India etc. might even give us daunting nightmares or leave us feeling embarrassed about our limited understanding of economics. But rest easy, it’s not something one’s absolutely got to know unless relevant, and it’s definitely not something that should make us insecure!

Regardless, let’s fill you in with a few fundamentals of PE funds India so that you’re not left with a gaping mouth the next time all those financial folk around you are discussing the matter!

So, what is private equity? In essence, PE funds India refers to a generic term wherein investments are made in the form of funds into private companies or firms that are on their way to turning private as a result of private buyouts.

Now, let’s take a look at some of the different types of Private Equity Funds:

•    Venture Capital: Venture Capital Funds are used to fund companies in their early stages.
•    Growth Capital: Such funds are used so as to enable the expansion of a company that might not have the necessary assets to finance growth.
•    Leveraged/Management Buyouts: Here, funds are invested such that the existing management is able to take control of the target.
•    Distresses/Turnaround Situations: Such funds are put to use when a company is unable to deal with their debts, so, the fund’s equity is used to recapitalise balance sheets.