An Analysis of Private Equity of Investment

An Analysis of Private Equity of

Investment

MD Raihanul HasanSenior LecturerSchool of BusinessState University of Bangladesh

Sanjida Sayed BarshaID: UG01-24-10-045

School of BusinessState University of Bangladesh

Overview of

InvestAsia Capital & Asset Management Ltd

Name of the Company            InvestAsia Capital & Asset Management Ltd.Legal Form                            

Technical collaboration with Financial Intelligence Services Ltd (FISL) of Hong Kong

Date of Incorporation  July, 2009

Date of getting License          

15th February, 2012

Date of Commencement        

October, 2012

Operation Structure                 

InvestAsia has appeared in the market horizon to offer innovative solutions to satisfy all asset management and financial services needs, and to deliver tangible results for clients through full service access to our capital market & MF Management, Diversified Portfolio Management, PE Management and other innovative capital market products.

Office Address                           

1/A D.I.T Extension Road (3rd floor), Fakirapool, Motijheel, Dhaka-1000, Bangladesh.

Web Site                                       

http://www.investasia.com.bd

# Mission:We aspire the best chosen and most admired financial institution.

That offers an array of lucrative products.

Vision:

To be the most respected, trusted and prominent Asset Management Company in Bangladesh.

Private Equity

DefinitionMoney invested in firms which have not ‘gone public’.

Private equity consists of investors and funds

Capital for private equity is raised from retail and institutional investors

Capital can be used to fund new technologies, expand working capital within an owned company, make acquisitions, or to strengthen a balance sheet.

CharacteristicsHighly illiquid

Long holding periods

High risk-return

Asset class

Grouped into a broader category called private capital

Types of Private Equity Funds

Buyout: funds provide equity capital to mature firms in need of capital or ownership transition.

Venture Capital: funds provide equity capital to start-ups and companies in the early stages of growth.

Growth Capital: funds provide expansion capital to enable a company to scale a business.

Special Situations: funds tend to invest in mezzanine or mid-layer debt capital, which provides more protection than equity financing in the event of default.

Generalists: funds invest in a variety of different stages.

Investment sectors of Private EquityBusiness Services

Healthcare

Consumer

Industrial

Lifespan of Private Equity

Private Equity’s Impact on the Global Economy

Private equity-owned firms are generally better managed than counterparts and have strong operational management practices

Firms acquired by private equity groups experience higher productivity growth than firms of the same age, size and industry

The globalization of private equity by investigating its impact in France and emerging markets

Rank Name of firms Headquarter Capital Raised as May 2013(billion

of USD)1 TPG Capital Fort Worth $ 35.73

2 Carlyle Group Washington, D.C. $ 32.823 The Blackstone Group New York $ 29.564 CVC Capital Partners London $ 17.99

5 CPP Investment Board Toronto $ 9.126 Nordic Capital Stockholm $ 7.747 PAI Partners Paris $ 7.55

8 China Investment Corporation

Beijing $ 7.00

9 CDH Investments Hong Kong $ 6.5110 RRJ Capital Hong Kong $ 5.8011 Hitec Vision AS Stavanger $ 5.73

12 Energy Capital Partners Short Hills, NJ $ 5.70

Largest Private Equity Firms

Private Equity practice in Bangladesh

IFC, a member of the World Bank Group

CDC Group, the UK’s development finance institution

Investment Opportunities ICT

Energy and Power sector

Ship building

Benefits

&Challenges

BenefitsAllow entrepreneurs to build their company with OPM

Private equity provides the funding that a company needs to expand its business.

Offers a number of value added services.

Company increases it value and ultimately has a liquidity event (e.g. IPO or sells to another company).

ChallengesLengthy and complex process

In the deal negotiation stage, you will have to pay for legal and accounting fees.

Investors become part owners of business - founder loss of autonomy or control.

Recommendations

Provide more infrastructure facilities.

The company involved should be in charge of the technical project management, while local staff can do the administrative part.

Need to ensure that governments and regulators around the world do not take actions that inhibit private equity firms from achieving superior returns for their investors.

The industry needs to continue to expand its post-investment, value-add capabilities

The current low market values also offer opportunities for Venture Capital and Expansion Capital funds

PE players need to intensify their work on generating appropriate returns

Thank You