Compiled by Linel DiasCompiled by Linel Dias

Private equity fund

• Private equity fundraising refers to the action of private equity firms seeking capital from investors for their funds.

• Typically an investor will invest in a specific fund managed by a firm, becoming a limited partner in the fund, rather than an investor in the firm itself.

• As a result, an investor will only benefit from investments made by a firm where the investment is made from the specific fund in which it has invested.

• Individuals with substantial net worth. Substantial net worth is often required of investors by the law, since private equity funds are generally less regulated than ordinary mutual funds.

• The managers of private equity funds will also invest typically providing between 1–5% of the overall capital.

• Often private equity fund managers will employ the services of external fundraising teams known as placement agents in order to raise capital for their vehicles. The use of placement agents has grown over the past few years, with 40% of funds closed in 2006 employing their services.

• The amount of time that a private equity firm spends raising capital varies depending on the level of interest among investors, which is defined by current market conditions and also the track record of previous funds raised by the firm in question.

• Firms can spend as little as one or two months raising capital when they are able to reach the target that they set for their funds relatively easily, often through gaining commitments from existing investors in their previous funds, or where strong past performance leads to strong levels of investor interest.

• The managers of private equity funds will also invest typically providing between 1–5% of the overall capital.

• Often private equity fund managers will employ the services of external fundraising teams known as placement agents in order to raise capital for their vehicles. The use of placement agents has grown over the past few years, with 40% of funds closed in 2006 employing their services.

• The amount of time that a private equity firm spends raising capital varies depending on the level of interest among investors, which is defined by current market conditions and also the track record of previous funds raised by the firm in question.

• Firms can spend as little as one or two months raising capital when they are able to reach the target that they set for their funds relatively easily, often through gaining commitments from existing investors in their previous funds, or where strong past performance leads to strong levels of investor interest.

Types of Private equity funds

•Leveraged buyout•Venture capital •Growth capital

Types of Private equity funds

•Leveraged buyout•Venture capital •Growth capital

Private equity fund performance

Due to limited disclosure, studying the returns to private equity is relatively difficult. Unlike mutual funds, private equity funds need not disclose performance data. And, as they invest in private companies, it is difficult to examine the underlying investments.

PRIVATE EQUITY FUNDS IN INDIAPRIVATE EQUITY FUNDS IN INDIA

• ICICI Ventures                                           

• UTI Ventures                                              

• Kotak Private Equity Group                      

• CVC International                                 

• JM Financial                                

• Evolvence                                                

• New Bridge Financial Advisors                  

• Carlyle                                                       

• Apax                                               

• Blackstone                                                

• Warburg Pincus                                         

• Temasek Holdings                                    

• General Atlantic                                       

• 3i      

Venture capitalVenture capital• Venture capital is a type of private equity capital typically provided by outside investors

to new businesses. Generally made as cash in exchange for shares in the investee company, venture capital investments are usually high risk, but offer the potential for above-average return

• A venture capital fund is a pooled investment scheme that primarily invests the financial capital of third-party investors in enterprises that are too risky for the standard capital markets or bank loans.

• This form of raising capital is popular among new companies, or ventures, with limited operating history, who cannot raise funds through a debt issue.

• The drawback of this form of entrepreneurship is that the investors get a say in the management of the company apart from the equity holding.

Types of Venture Capital Funds

Types of Venture Capital Funds

• VCFs promoted by the Central govt. Controlled development financial institutions such as TDICI, by ICICI, Risk capital and Technology Finance Corporation Limited (RCTFC)

• VCFs promoted by the state government-controlled development finance institutions such as Andhra Pradesh Venture Capital Limited (APVCL) by Andhra Pradesh State Finance Corporation (APSFC)

• VCFs promoted by Public Sector banks such as Canfina by Canara Bank and SBI-Cap by State Bank of India.

• VCFs promoted by the foreign banks or private sector companies and financial institutions such as Indus Venture Fund, Credit Capital Venture Fund and Grindlay's India Development Fund.

• VCFs promoted by the Central govt. Controlled development financial institutions such as TDICI, by ICICI, Risk capital and Technology Finance Corporation Limited (RCTFC)

• VCFs promoted by the state government-controlled development finance institutions such as Andhra Pradesh Venture Capital Limited (APVCL) by Andhra Pradesh State Finance Corporation (APSFC)

• VCFs promoted by Public Sector banks such as Canfina by Canara Bank and SBI-Cap by State Bank of India.

• VCFs promoted by the foreign banks or private sector companies and financial institutions such as Indus Venture Fund, Credit Capital Venture Fund and Grindlay's India Development Fund.

While both PE firms and VCs invest in companies and make money by exiting – selling their investments – they do it in different ways: