The Most Popular Ways Of Private Equity Funding

We have heard the disclaimer for the mutual funds investment for a number of times  on television radio but have we ever tried to decipher what they actually mean. The disclaimer states ’Mutual  Funds Investment are subject to market risks. Read the documents carefully before investing’.  With any sort of market investment there is always a risk associated with it; however,  the private equity investment is one of the  least risk  business investments in the world. Private equity funding is one of  the most nascent methods of investment  in the business world but they seem to have  taken over the world of capital investments. 




The three major variety of private equity in India are:

1. Growth funding:
2. Leveraged Buyout and
3. Venture capital

Growth Funding: This types of investment is done to help a company develop new business verticals. This generally happens in the companies which are already established and only lack some  capital to invest in a new section they would like to explore. To  expand a business the companies need to keep experimenting in new areas  and the growth capitalists help the companies do so.

Leveraged Buyouts: This  type of  investment is done to  take partial or complete control of a company.  This happens when a company is in a bad  business shape and the mutual funding helps them rebuild the company with its own resources.  In leveraged buyout a portion of the company is bought on equity and rest on debt. The assets  and cash flow out of the company is used to pay off the debt.

Venture Capital: Venture capital is the most popular form of private equity in India. The startup companies thrive on the support of venture capitalists.  These companies require help in establishing a business and their management and marketing.  The venture capital check and  verifies the business  model and assesses  the potential profit and the investment is done in proportion to amount of profit expected.

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