How private equity investments help companies to have better ROI
The startup ecosystem in India is booming with ambitious entrepreneurial talent, foreign funding and government support. The secret to the success of a startup besides indigenous talent is funding for which thankfully there are several options in India. A startup in the seed stage, growth stage, expansion stage or mezzanine stage needs private investments to survive and grow. Some options at the disposal of startup founders are angel investors, venture capitalists, incubators & accelerators and
private equity firms in India.
Private equity has emerged as a promising alternative for mature companies looking to raise capital for expansion plans. Private equity funds are investment firms who invest money in established firms with stable operations and revenues to fuel their expansions. They take a large stake in the company and stay invested until the companies where the investment is made offer IPO in which case they liquidate their investment by selling the stakes in public market. This is an attractive financing option for companies looking for funding because it has many advantages, some of which are:
Growth Capital
Also known as ‘growth equity’, this kind of funding helps mature companies in their growth stage by buying a stake with an objective of growth rather than a turnaround. Usually companies are apprehensive about taking this path, this kind of funding in private equity in India bears many fruits.
Large Amounts of Funding
Compared to other funding options that may include venture capital, Private Equity funding is better in terms of the amount of money they can offer which could be in hundreds of millions, while several VCs may be needed to be approached to raise the whole sum required as they roll out only a relatively smaller sum.
Active Involvement
While many investors whether venture capitalists or angel investors just invest the money and ask for growth reports. PE funds tend to be a lot more involved with the operations of the business. They provide help with management, re-evaluation of assets, strategy formations etc. which usually result in major improvements.
Commitment until IPO
A private equity firm keep invested in a firm until the IPO as they usually make profit by selling the stakes at premium. This makes things interesting for the companies receiving the PE fund as they know the investment firm will try to do everything in their capable limits to improve their profits which is a major reason to get a private equity investment.
private equity firms in India.
Private equity has emerged as a promising alternative for mature companies looking to raise capital for expansion plans. Private equity funds are investment firms who invest money in established firms with stable operations and revenues to fuel their expansions. They take a large stake in the company and stay invested until the companies where the investment is made offer IPO in which case they liquidate their investment by selling the stakes in public market. This is an attractive financing option for companies looking for funding because it has many advantages, some of which are:
Growth Capital
Also known as ‘growth equity’, this kind of funding helps mature companies in their growth stage by buying a stake with an objective of growth rather than a turnaround. Usually companies are apprehensive about taking this path, this kind of funding in private equity in India bears many fruits.
Large Amounts of Funding
Compared to other funding options that may include venture capital, Private Equity funding is better in terms of the amount of money they can offer which could be in hundreds of millions, while several VCs may be needed to be approached to raise the whole sum required as they roll out only a relatively smaller sum.
Active Involvement
While many investors whether venture capitalists or angel investors just invest the money and ask for growth reports. PE funds tend to be a lot more involved with the operations of the business. They provide help with management, re-evaluation of assets, strategy formations etc. which usually result in major improvements.
Commitment until IPO
A private equity firm keep invested in a firm until the IPO as they usually make profit by selling the stakes at premium. This makes things interesting for the companies receiving the PE fund as they know the investment firm will try to do everything in their capable limits to improve their profits which is a major reason to get a private equity investment.
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