private equity1
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Private equity is a source of investment capitalfrom high net worth individuals andinstitutions for the purpose of investing and
acquiring equity ownership in companies.Partners at private equity firms raise funds andmanage these for the purpose of yieldingfavorable returns for their shareholder clients,
typically with an investment horizon betweenfour and seven years.
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Private equity can be classified into following
Leveraged buyout (LBO)
Venture capital
Growth capital
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It refers to a strategy of making equityinvestments as part of a transaction in
which a company, business unit orbusiness assets is acquired from thecurrent shareholders typically with theuse of financial leverage. The companies
involved in these transactions aretypically more mature and generateoperating cash flows.
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It is a broad subcategory of private equity thatrefers to equity investments made, typically inless mature companies, for the launch, early
development, or expansion of a business.Venture capital is often sub-divided by thestage of development of the company rangingfrom early stage capital used for the launch ofstart-up companies to late stage and growthcapital that is often used to fund expansion ofexisting business that are generating revenuebut may not yet be profitable or generatingcash flow to fund future growth.
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It refers to equity investments, most oftenminority investments, in more mature
companies that are looking for capital toexpand or restructure operations, enternew markets or finance, a majoracquisition without a change of control of
the business.
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It was after World War II true privateequity investments began to emerge
marked by the founding of the first twoventure capital firms in 1946: AmericanResearch and Development Corporation.(ARDC) and J.H. Whitney & Company.
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In India, private equity is reasonably young,dating back to the mid-1990s. Indiancompanies received almost no Private Equity
(PE) or Venture Capital (VC) funding a decadeago. The environment heated up in the end ofthe 90s with the IT boom, with companiesinvesting (and getting their fingers burnt) with
their investments. This scenario began tochange in the late 1990s with the growth ofIndias IT companies and with thesimultaneous dot-com boom in India.
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Goldman Sachs Principal Investment Area
The Carlyle Group
Kohlberg Kravis Roberts
TPGApollo Global Management
CVC Capital Partners
The Blackstone GroupBain Capital
Warburg Pincus
Apax Partners