What is Private Equity Investment?

Private equity – this term has come to be one of the most common phrases. Though many people talk of it, and its implications, only a few understand what it actually means. Substantially private equity stands for the equity that is applicable only for private companies and cannot be traded publically. Also, due to regulations they cannot even be listed publically. PE is essentially made of several firms that invest directly in private companies or entities at different stages and ensure stability of maturity and cash flow for extended benefits. 
Private Equity Funding


Most people opt for private equity funding and investing since investing in private and upcoming companies with a stellar business and revenue model maximizes the return on investment. It is beneficial to invest in growing companies that have the potential of making it to the IPO. The pool of investors consists of pension and endowment funds, firms funded by accredited investors and investors with stable income source. They also invest in real estate to make the most of property fluctuations. There are two types of private equity firms on the basis of investment strategies – venture capital investments and leveraged buyouts.

Venture capital investments place their prime focus on maximizing ROI by purchasing shares of high potential low maturity companies in newer or less fragmented markets. Then they wait for the companies to either get listed or until they need to liquidate for other cash commitments. On the other hand, leveraged buyout firms are the ones that buy private firms of business units to exploit the situation and make money through it. Venture capital firms raise money by borrowing from a pool of investors, but leverage buyout firms use dent financing. They only contribute a fraction of proposed purchase to maximize benefits and earn maximum ROI by leveraging the investment.

There are companies such as Everstone Capital that deals in private equity funds in India that will be able to offer you in-depth guidance on private equity, real estate and hedge funding.

Comments

Post a Comment

Popular posts from this blog

Know About These 4 Points Before Investing In Private Equity

Image
Private equity investment is quite a tricky concept to understand. One must be highly aware of what it is all about and what all it entails before investing. Equity is all about raising funds for a company with no obligation of having to pay back the dividend to shareholders.   The concept is a pretty vast and risky business. But to increase your chances of success and good returns on private equity investment in India , there are a few points you must keep in mind. We narrowed it down simply for you. Take a look-                          Stable cash flows: A private equity investment is likely to be good as the deals get improved returns because a good portion of finance is being used for investment. Using debt is known as leveraging the company’s assets. The company must strive to also make considerable interest (monthly, quarterly, etc.) and repayments. They can’t miss those payments either. If they succeed in this, banks will be open to lending as they can se
Read more

How to prepare a perfect pitching strategy for your equity firm

To secure funding for your firm or start-up is one of the most important things for the health of your company. Many pitches made to limited partnership firms (LP) fail because of one little piece of information that you forgot to put or did not put in the right place. For some, the presentations are where you make or break your pitch and to garner and hold the attention of the people who will help you secure your funding is very important. To help you secure your private equity funding and ensure a better future for your company, here are a few tips:   Keeping the presentations short and crisp The presentations should not be long and tedious because no LP would want to sit through a pitch that would beat around the bush and not get to the main highlights as soon as possible. The first couple of minutes are the most crucial and this is the time where you should embed your most important messages. Presenting the track record at the start Anyone investing in any typ
Read more

Types of private equity investments

Image
Often referred as “family of alternative investing methods” by most business leaders, private equity is a bit complex and multidimensional topic to understand. It typically includes leveraged funds, growth equity funds, venture capital, and many other type of special situation funds.   The private equity funds in India can be industry specific or can have a focus on specific geography. Let’s dig this subject a little deeper and find out the different kind of private equity funds.  Venture Capital Funds: These funds can be further divided into two sub-types—early stage funds or later stage funds. Venture capital investment involves acquiring minority stakes in growth sectors like healthcare, bio-tech, internet, and energy. The basic motto of venture capitalist funds is recruiting the right people, professionalize various corporate functions, and make the functions of the company much more streamlined.   Growth equity funds: These funds involves investment in more
Read more