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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
