 Posted: Tue 11:44, 12 Nov 2013 Post subject: Every other day |
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| Understanding the Private Equity Investment,[url=http://www.chronotime.net/]cheap christian louboutin shoes[/url]
Every other day, we come across news such as million dollars private equity investment made into an unknown Indian company by an unknown private equity fund. Every other day, we come across newssuch as milliondollars private equity investment made into anunknown Indian company by an unknown private equityfund. In the recent years, equity industry has emerged as a potentialsource of capital for the corporate sector in India. Private Equity InvestmentA private equity fund is aninvestment fund in which capital is raised from retail and institutionalinvestors and such collective private equity funds are used for making investmentsin various equity securities and to a lesser extent to the debt capital as perthe investment strategies associated with privateequity firm. Generally, such equity firms often show interest in business showingpotential for growth within five years. Firms with growth potential must beable to show an experienced team of individuals having capabilities to achievebusiness goals within stipulated time.Private equity capital is not listed on a publicstock exchange. The majority of private equity investors are institutional and accredited investors who cancommit large sums of money for long periods of time. Many equity firms conduct leveragedbuyouts (LBOs), where large amounts of debt are issued to fund a largepurchase. Equity firms will then try to improve the financial results andprospects of the company in the hope of reselling the company to another firmor cashing out via an IPO. Investor ProfilePrivate equity fund is typically opted byorganizations rather than by individuals. Such investment can be really helpful for following groups:a.Those who want to start up a companyb.Those who want to expand their businessc.Those who want to buy out portion of their parent companyd.Those who want to buy into a companyHence, private equityfunds are generally used to start a business, pay out original owner, makeacquisitions or fund organic growth into new markets.AdvantagesPrivate equity is better way offunding your business than debt capital. For example, if you obtain funds foryour business from a lender, lender has a right to receive interest on loan aswell as on repayment of capital in spite of success or failure of your business.However, in case, private equity has been investedin your business, the shareholders have a stake in your company and their earningdepends upon the profit and growth of your company. Organizations backed byprivate equity usually grow much faster than other types of businesses, as suchorganization employs skilled managers and other resources to meet its financialobjectives. Many private equity companies’ works with work with other financeproviders to put business into right funding plan. Privateequity fund managers basically invest capital on behalf of institutionalclients and offer higher return on investments to reflect the slightly higherrisk of this asset class. |
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