What is Private Equity Fund Raising?
As pioneers of the Indian private equity industry, Uplaxya Consultants Pvt. Ltd. (UCPL) team is adept at identifying outstanding entrepreneurs and management teams of emerging businesses. We look for companies that have a clear business strategy with significant opportunities to scale up with a defendable market positioning.
A private equity fund is a collective investment scheme used for making investments in various equity securities according to one of the investment strategies associated with private equity.
Private equity in India manage the investments and portfolio of private companies. They research and analyze and help private companies strategize in the long run.
We specialize in syndication of Private Equity for companies for their capitalization/re-capitalization strategies and achieving next stage growth. Access to key decision makers at PE funds gives us an edge in optimal structuring and efficient closure of transactions. We service our clients through various stages of the Equity Fund Raising process namely collateral preparation, investor short listing, commercial term-sheet, due diligence and closure.
What is Private Equity Fund Raising?
The Indian investment market is highly complex. Sourcing the deal at the right valuation with a dedicated promoter group and at an appropriate time is critical to any investments’ success. Most of the big Private Equity firms have found this challenging because of a lack of understanding of the Indian business mindset and because of a complex network of intermediaries involved. Our grass root understanding of the Indian environment has helped us source deals at a valuation far below that invested by other international and Indian Private Equity firms.
Global investors are betting big on India’s long-term growth story. India is today one of the most attractive emerging markets across Asia with a billion plus captive consumers. Uplaxya Consultants Pvt. Ltd. is well positioned to develop compelling local investing themes.
Through macro research, in-house analytics and frequent industry interactions, we identify industry and socio-economic trends, local consumption patterns and need-gap opportunities on an ongoing basis.
Over the last several years, we have backed some of India’s most successful entrepreneurs in sectors like:
- Healthcare & Life sciences (pharmaceuticals and biotechnology)
- Consumer businesses (FMCG, retail, media & entertainment)
- Light manufacturing
- Agri -businesses and food processing,
- Information Technology (software products, services and IT-enabled services)
- Infrastructure-led services
- Financial Services etc.
How to Private Equity Fund Raising
- There are four basic things private equity investors do to earn money.
- Raise money from Limited Partners like pension and retirement funds, endowments, insurance companies, and wealthy individuals
- Source, diligence, and close deals to acquire companies
- Improve operations, cut costs, and tighten management in their portfolio companies
- Sell portfolio companies (i.e., exit them) at a profit
- There are four basic things private equity investors do to earn money.
- Raise money from Limited Partners like pension and retirement funds, endowments, insurance companies, and wealthy individuals
- Source, diligence, and close deals to acquire companies
- Improve operations, cut costs, and tighten management in their portfolio companies
- Sell portfolio companies (i.e., exit them) at a profit
Foreign Direct Investment (“FDI”) Policy is issued by the Department of Industrial Policy and Promotion every year. The Policy regulates the inflow of FDI in India and further imposes general conditions and sector specific conditions on these investments. The
FDI Policy also puts caps on investments and enlists the sectors in which the same can be made. The two types of routes for FDI as enumerated in the Policy are the Automatic Route and the Government Approval Route. In case the investment falls under the automatic route, no permissions and approvals need to be taken by the investor, however, if the same falls under the government/approval route due permissions need to be in place
The investment in various organizations is now routed from the “Alternate Investment Funds” which are established for the purpose of making investments. These funds need to be complaint with the SEBI (Alternative Investment Funds) Regulations, 2012. The Regulations provide a legal framework for the pool investment funds in India such as real estate, private equity, hedge funds etc
How to Private Equity Fund Raising
Private equity is finance provided in return for an equity stake in potentially high growth companies. However, instead of going to the stock market and selling shares to raise capital, private equity firms raise funds from institutional investors such as pension funds, insurance companies, endowments, and high net worth individuals. Private equity firms use these funds, along with borrowed money and their own commercial acumen, to help build and invest in companies that have the potential for high growth.
Private equity funds raise money from institutional investors from across the world. This can include international pension funds, sovereign wealth funds or insurance companies, to local authority pension schemes, family offices or university endowments.
Pensions and other institutional investors invest in private equity because they want their investments to outperform the public markets, which it consistently does.
The ultimate aim of private equity investors is to create value. As such, they look for high quality management teams with a credible plan to grow their business. Private equity investors are long-term investors and work with the company’s management to improve the company’s performance and strategic direction by aligning incentives, improving business plans, making operational improvements and strengthening corporate governance. With this mentality to buy and help build, coupled with a disciplined approach to organizational governance, private equity investors display a nimbleness and adaptability that raises the value of their investment and ensures that value can be realized in the future.
The attraction of private equity investment to a company and to the management is the opportunity for managers to own a significant portion of their business. Aligned interests between the managers and the investors fosters the sense of ownership that is central to the concept of private equity investment. Besides the infusion of capital, companies also benefit from the experience and insight that fund managers bring to the board room.
Private equity adds value to a company in a variety of ways. Thorough due diligence sheds light on a company’s strengths and weaknesses alike, and with it comes a sound initial investment rationale. By targeting growth sectors and new markets, private equity investors can focus on creating better revenue generation and implementing programmes that yield operational efficiencies. In addition to cost reduction, organic growth is now increasing in importance as growth by acquisition is becoming relatively harder to undertake.
It is also critical to establish a structure in which both investors and business managers share a common ownership vision, and are motivated to maximize value. Active ownership, effective organizational change and powerful incentive schemes are all part and parcel to the hands-on governance model that includes constant and keen oversight, defined goals and timing, disciplined decision-making and deep resources to match. Ultimately, this approach leads companies owned by private equity to outperform similar publicly-owned companies with relative benchmarks.
- Focus on organic and inorganic growth
- Strategic capital for business expertise besides funds for growth
- Promoters cash out by unlocking business value
- Business assessment
- Business Plan / Information Memorandum
- Potential investors
- Business valuation and negotiations
- Transaction structuring and closure
- Extensive investor database and relationships through our network of business associates providing ability to raise capital at all levels
- Stream lined transaction process for optimization of time, cost of capital, reduction in transaction costs and effective implementation
- Strong implementation team from diverse disciplines
- We assess and conceptualize optimal financing packages tailored to specific business interests and objectives
