Know it All about Private Equity Investment

Private equity has been one of the terms most of us would have heard multiple times but never understood its importance or functioning. While half of us never bothered what it means, other half scratched their head while reading about it on internet.

Private equity stands for equity that is applicable only for private companies and cannot be traded or listed publically. They are made of several firms that invest directly in private companies or entities at different stages. It also ensures stability of maturity and regular cash flow. Commenting on a larger landscape, people opt for private equity in India or investing in upcoming companies with unique business and revenue model which maximizes the return on investment. Their revenue generation helps investors to excruciate return on investments which works wonders for them, especially with growing companies that have the potential to make it to IPO. 

Private Equity India

Broadly, there are two types of private equity firms on the basis of investment strategies adopted – venture capital investment and leveraged buyouts. Venture capital investments aim on maximizing ROI. They achieve their target by purchasing shares of high potential yet low maturity companies in newer or less fragmented markets. Their next step is to wait for the companies to either get listed or until they need to liquidate for other cash commitments. They raise money by borrowing from a pool of investors.

Leveraged buyout firms purchase private business units and make money through it. Unlike venture capital investment, leverage buyout firms use dent financing. They only contribute a fraction of proposed purchase and excruciate ROI by leveraging the investment. If you wish to invest in this domain, seek help from leading private equity firm in India such as Everstone which will be able to extend professional help and services.