Investing in PE Funds? Here are the strategies you should know
In many cases, organizations fail to continue with their processes and slowly lapse. They do not make enough profit that will allow them to keep the processes ongoing. Under such circumstances, they require help from third-party investors. These investors come to assistance and lend money to these organizations so that they can acquire new technology, make acquisitions, and expand working capital successfully. The loan lent by the investors or firms is referred to as the private equity fund. Across the world, this type of fund has been helping organizations to increase productivity and expand the business. Hence, understanding the various strategies that can be used while investing in a private equity fund in India is crucial:
Venture capital
Venture capital is the fund invested in companies that do not earn much profit. This type of investment is done in the type of firms to identify their potential in establishing themselves in the market and providing innovative solutions. The loan provided to them helps them to sustain in the market and flourish. This type of fund is invested in start-ups as they have a huge potential and very less experience.
Real estate
Real estate fund is the investments made in various real estate properties. Experts say that there are various approaches to invest in such funds: (a) core - with low risks, (b) core plus - with moderate risks, (c) value-added- with moderate to high risks and (d) opportunistic- with high risk. A proper understanding of the various approaches of investing in real estate fund is important before investing in real estate funds.
Growth capital
Developed and growing organizations make abundant profits. They keep enough funds stacked so that they can be invested in developing the organization in the need of the hour. To facilitate their cause, expand the business, enter new markets and acquire new technology, this fund proves to be very useful. However, not all organizations can follow this approach. Firms that earn a huge amount of profit can only afford to make this type of investment.
Leveraged buyouts
In some cases, PE firms invest in an organization a significant amount of capital in exchange for the assets owned by the organization. In return, they gain control over their functioning and process. This provides guidance to the organization and helps to produce more value. This type of fund is usually used for paying off debts at lower risks.
Venture capital
Venture capital is the fund invested in companies that do not earn much profit. This type of investment is done in the type of firms to identify their potential in establishing themselves in the market and providing innovative solutions. The loan provided to them helps them to sustain in the market and flourish. This type of fund is invested in start-ups as they have a huge potential and very less experience.
Real estate
Real estate fund is the investments made in various real estate properties. Experts say that there are various approaches to invest in such funds: (a) core - with low risks, (b) core plus - with moderate risks, (c) value-added- with moderate to high risks and (d) opportunistic- with high risk. A proper understanding of the various approaches of investing in real estate fund is important before investing in real estate funds.
Growth capital
Developed and growing organizations make abundant profits. They keep enough funds stacked so that they can be invested in developing the organization in the need of the hour. To facilitate their cause, expand the business, enter new markets and acquire new technology, this fund proves to be very useful. However, not all organizations can follow this approach. Firms that earn a huge amount of profit can only afford to make this type of investment.
Leveraged buyouts
In some cases, PE firms invest in an organization a significant amount of capital in exchange for the assets owned by the organization. In return, they gain control over their functioning and process. This provides guidance to the organization and helps to produce more value. This type of fund is usually used for paying off debts at lower risks.
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