Private Equity Strategies You Should Know

The public capital that is not listed on a public exchange is called private equity. It is an asset class that involves the use of equity securities and debt to purchase shares of private companies or those of public companies that will eventually be delisted from the public stock exchanges. Private equity investments are composed of a private equity firm, an angel investor or a venture capital firm. Although these investors have separate goals and mission, they all follow the same premise; providing working capital for the growth, development, and advancement of the company. Mentioned below are the several strategies to invest private equity funds in India that every investor should know about:

Venture Capitals

The capitals used to invest in companies that have a very low-profit margin are called venture capitals. The idea behind this type of investing is to identify potentials in the market and lend them a helping hand. This will provide them with the necessary assistance. Venture capital investments meant for startups that have high chances of growing and developing in the near future.

Real Estate

Private equity real estate refers to a specific class in real estate investment. It is one of the four quadrants of the real estate capital markets, which includes private equity, private debt, public equity and public debt. It can be classified into different types of investment like core- which has low risks, core plus- which has moderate risks, value added- which has moderate to high risks, and opportunistic- which has high risk.

Growth Capital

Large-scale industries or companies that have a huge amount of capital available tend to make this kind of investments. Growth capital funds are used to fund for the expansion or growth of the business, and also to increase the opportunities for entering new markets. This type of investments is made generally at a much later stage of a firm when they are quite well-established.

Leveraged Buyouts

Leveraged buyouts are a type of private equity funds in India that refers to a strategy of raising capital through bonds or loans by a company to acquire another company. Private equity firms acquire a company, then manage and control them for a period of time because they believe that they can generate more returns than the interest paid on the debt. This type of funds is typically utilized to pay off a debt with low risks.

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