4 essential Private Equity strategies
Private Equity
is an important term in financial markets but it’s a little too technical to
grasp for everyone. To put it simply, private equity is a constitution of firms
and individuals who tend to take public firms and turn them into private firms
after acquiring them. It is the delisting of firms or enterprises from the
public stock exchanges. Private Equity funds are quite important in the
economic growth of a country like just like the concept of real estate fund.
India is proceeding towards a bright future in private equity and real
estate.
If you’re
interested in learning about this type of equity, you must take a look at the
following strategies:
Venture Capital
Venture capitalists
search for start-ups or young enterprises with a little or no history of
profits. The main motive is to invest in promising companies to generate high
profits and eventually exit the firm. There is certain amount of inherent risk
in investing in small companies but, the investing firms carry out extensive
research before allotting PE funds. India hosts some major PE firms like
Everstone capital.
Leveraged Buyouts
It is a common
practice for a company to acquire other smaller companies for various purposes.
The monetary requirements are high and companies obtain loans to acquire these
firms. This process of getting a loan to buy another company is known as
Leveraged Buyout (LBO). It is a suitable option for PE firms.
Growth Capital
Growth capital
refers to the money invested in already flourishing companies that require
capital to expand their business operations. These firms usually make profits
that are not enough to fund the expansion processes. These companies represent
a higher business scale than the companies looking for venture capital.
Mezzanine Financing
Mezzanine
financing is a term that denotes the approach of an enterprise to acquire
liquid assets through equity assets and debts. One of the advantages of this
category is that the companies don’t have to surrender a substantial amount of
ownership in equity to acquire the required amount of capital.
Comments
Post a Comment