Private Equity - An introduction 26 th June, Pune GDA Consulting

MenMoney Machine &Materials Market Introduction The 4M’s for running any business.

 Money Capital/Finance/Basic force to turn on and keep running, the business. Capital / Equity Borrowed Money -Internal -External -No fixed cash outgo every year -fixed repayment schedule -e.g. Owner’s capital, - e.g. Term loans from Banks Quasi equity in the nature of loans Debentures etc. from Relatives etc.  funds infused by the person doing the business  No prior repayment schedule.  The cost of such fund is paid in longer tenure  in a manner which will not hamper the business funds introduced by any third party for comparatively short period. The repayment schedule and servicing of Cost of such funds is usually decided at the time of infusion. For eg. Sum borrowed from banks / FI’s, Debt instruments like bonds, debentures etc. Introduction Confidential GDA Consulting Money PRIVATE EQUITY= EQUITY/DEBT

 PE in finance is an asset class consisting of equity and debt securities in companies that are not publically traded on any stock exchange.  Direct investment by an investor in the company with specific set of goals for which the funds are to be utilised.  Purpose of Private equity  Nurture expansion,  Development of new-product or  Restructuring of company’s operations, management, or ownership Private Equity (PE) Confidential GDA Consulting

 Long term Capital for Company’s Growth  Increased visibility with Bankers, Suppliers, Clients  A partnership; Sharing risk and rewards  Adoption of high performance management standards  Strategic, Operational and Financial Support  Assistance owing to Investors’ network of Contacts and portfolio of investments Advantage- PE Confidential GDA Consulting

 Indian companies signed as many as 655 Private Equity deals totalling USD10.68 billion in 2013; 12 % increase than (USD10.68 billion in 2013 than USD9.5 billion in 2012).  Sector wise no of deals Information technology attracted 210, Consumer discretionary (152 Deals) Financials (99 Deals) Health care (73 Deals) Industrials (60 Deals)  Sectors attracted Private Equity firms to invest worth USD 2771 million Consumer discretionary (USD 1,812 million) Information technology (USD 1,642 million), Health care (USD 1,264 million) and Telecommunication services (USD 1,264 million). Some Statistics Confidential GDA Consulting

No Security No Personal Guarantee No Interest Obligations No Fixed cash outflow every year Expectations of High returns on equity Financial and operational Discipline Intervention in Overall Management The Trade off Confidential GDA Consulting

Process of PE Confidential GDA Consulting Identify need for PE Appointing PE Advisors Preparation/Evaluat ion of Business Plan and Valuation of Business Deciding the Capital Structure Approaching PE Investor- initial Enquiries Due Diligence Final Negotiation and Completion MonitoringExit

Investee Company PE Investors/PE Fund Investment Advisors/Investment Bankers Due Diligence Agencies Legal Agencies Internal Auditors Parties to PE Investing Confidential GDA Consulting

 Are you prepared to take responsibility of being an entrepreneur? - to run a organised business; -to delegate responsibilities to a team and knowhow to motivate them, -to take on the legal responsibilities -- in short, to take a plunge?  Are you prepared to give up a part of your Company’s capital to a private equity investor?  Does your business operate in a growth market?  Are your Company’s development prospects sufficiently ambitious?  Does your company have a certain technological or competitive advantage that can be developed or exploited? Is Private Equity right for your Business Confidential GDA Consulting What is the PE Investor looking for?  Quality and stable management team – capable of turning goals into reality?  Solid management procedures  Transparent legal structure  High growth, Competitive products and services  In case of disposal or transfer, loan capacity and recurring profits

Time taken to raise PE- 5 to 8 months Costs involved  For Investment Advisor- anywhere between 2% to4% of equity to be raised  Payment to Due Diligence Agencies- A lumpsum fee  Payment to Legal Agencies Raising of PE is just the beginning not the end Negotiation is the key word. Relations with the Investor will matter Other factors Confidential GDA Consulting Prepare a Business Plan Find a PE Investor Accelerate the Growth of your Business

Consulting arm of the prestigious Chartered Accountancy firm G.D.Apte & Co. Chartered Accountants Presence of 8 decades through the firm Involved in several mergers, acquisitions, valuations, due diligence assignments, debt and equity syndications Team comprising Chartered Accountants, MBA’s, Lawyers, Company Secretaries, Ex-Bankers Profound understanding of Businesses across sectors and sizes and their financial needs. An all pervasive solution for raising of Equity Finance. About GDA Consulting Confidential GDA Consulting

GDA Consulting Pune GDA House Plot No. 85, Bhusari Colony (Right) Paud Road, Pune , India Phone : Fax : Mumbai Office No. 1, 2 and 3 4 th Floor, Rahimtulla House, 7 th Homji Street, Fort,Mumbai , India Phone : Bangalore D-II, 207, Shriram White House, 15th Cross, 6th Main, R.T. Nagar, IInd Block, Bangalore Phone : GDA Consulting