PRIVATE EQUITY

Presented by:
Anchal Arora Shabani Nurpuri Chetan Taneja Aman Anand Yashashvi Singh Heena Mehta

CONCEPT OF PRIVATE EQUITY

MEANING: Private equity is an asset class consisting of equity securities in operating companies that are not publicly traded on a stock exchange. Capital for private equity is raised from retail and institutional investors. INVESTMENTS ARE DONE BY: Private equity firms Venture capital firms : Investment firm that makes venture investment. Angel investors: Provide capital for business start up usually in exchange of convertible debt or ownership equity.

INVESTMENT STRATEGIES IN PRIVATE EQUITY

Leveraged buyouts :A private equity firm buys majority control of an existing or mature firm. Venture capital: Refers to equity investments made, typically in less mature companies, for the launch, early development, or expansion of a business. Growth capital: Likely to be more mature than [venture capital] funded companies. Distressed investments: To investments in equity or debt securities of financially stressed companies. Mezzanine capital: Often used by smaller companies that are unable to access the high yield market.

OTHER STRATEGIES
(that can be considered private equity)
Infrastructure: Investments in various public works that are made typically as part of a privatization initiative on the part of a government entity y Energy and power :Investments in a wide variety of companies (rather than assets) engaged in the production and sale of energy and power y Fund of funds : Investments made in a fund whose primary activity is investing in other private equity funds.
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PRIVATE EQUITY INVESTMENT

The key components of private equity:

Private equity investors:

High net-worth individuals, institutions, or large companies. y Limited Partners in the fund.
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Private equity fund :

Limited Partnerships owned by a General Partner and Limited Partners. y General Partner manages the fund y The fund is a tool to allow the investment process to occur
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(Contd.)
Private equity firm:
General Partner of the private equity fund and intermediary between investors and businesses seeking capital. y The investors agree to let the firm manage the investment and firm charges additional fees to the investors. y Unlimited liability and a strong control in its investment decisions.
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Private equity investments:

Companies which the General Partner has chosen to invest in. y Private equity firms invest in several different companies.
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PRIVATE EQUITY INVESTMENT PROCESS

BENEFITS OF PRIVATE EQUITY

Provides large inflow of capital for long term productivity investments. PE funds are used to expand working capital. PE funds facilitate mergers and acquisitions. General partner runs the company. Companies backed by PE funds are more efficient and profitable.

BENEFITS OF PRIVATE EQUITY

PE attracts high caliber and experienced managers. y PE helps if one wants to start a company, expand the business, buy out a portion of parent company and turn around a company. y PE firms work outside the public eye. y PE induces motivation in the management of the company.
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WHY PRIVATE EQUITY IN INDIA?

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Growing economy. Changing government policies. Young population. Poised to become the next big market in private equity. Market address of strong middle class.

MAJOR PLAYERS
ICICI:
ICICI Venture is one of the largest and most successful private equity firms in India. y It has built an enviable portfolio of companies across sectors including pharmaceuticals, Information Technology, media, manufacturing, logistics, textiles, real estate etc. y Their investment thesis is driven by our focus on the following:  Buyouts  Structured transactions  Growth Capital
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MAJOR PLAYERS
KOTAK PRIVATE EQUITY GROUP (KPEG):
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KPEG is a specialist India Private Equity firm of Kotak Mahindra Group- focused on helping emerging corporate and mid-size enterprises evolve into tomorrow's industry leaders. y The size of their initial investment is typically between USD 15mn and 40mn depending on the nature of the company's business. y KPEG's investment objective is to achieve long term capital appreciation through investments in privately negotiated equity and equity-related investments .

JYOTHI LABORATORIES LTD.

It is a Mumbai based FMGC company founded in 1983 by M.P Ramachandran-the current chairman and managing Director. The company has 21 manufacturing units at 14 locations across India. It has 6 business divisions namelyFabric Care Household Insecticide Utensil Cleaners Fragrances Personal Care Fabric Care Service

JYOTHIS ACQUISITION OF HENKEL INDIA ACQUISITION DETAILS

On May 6, 2011,Jyothi announced that it had successfully acquired a majority stake in Henkel India. Jyothi currently controls 65.87% of Henkel India and has launched a mandatory open offer for an additional 20%. Jyothi will pay INR 3,308 million to acquire the 85.87% stake in Henkel India. Jyothi bought Henkel AGs outstanding preference shares for a cash consideration of INR 439 million.

FMCG VIEW REGARDING HENKEL INDIA ACQUISITION BY JYOTHI LABORATORIES

The acquisition scales up Jyothi to one of the leading FMCG companies in India with consolidated Performa FY2011 revenue of INR 10,412 million compared to a standalone revenue of INR 6,195 million. The acquisition helped Jyothi pave the way for a more balanced revenue stream by significantly enlarging the portfolio of products and reduce its exposure to Ujala Supreme. Value creation through both revenue and cost synergies.

JYOTHI LABORATORIES MAY TAKE PRIVATE EQUITY ROUTE TO SETTLE Rs. 600 CRORE DEBT:MD
ET Now Jun 1,2011,3:04pm IST In an interview with ET Now, Ullhas Kamath, MD, Jyothy Laboratories, talks about volume growth and the company's future plans. .

Acquisition of Henkel India stake as well as its liabilities: On 5 May, Jyothi Lab bought Henkels 50.97% stake in its Indian unit forRs.118.72 crore. Jyothi Lab also acquired the liabilities of Henkel and now has on its books a debt of Rs.600 crore.

ACTIS IN TALKS TO ENTER JYOTHI AFTER HENKEL BUY

UK private equity giant, has made a direct call to the promoters of Jyothi Laboratories to re-enter the FMCG firm. Actis was one of the growth investors in Jyothi some years ago. The latest approach comes at a time when Jyothi has asked investment bankers to bring in a global PE giant to digest the Henkel acquisition.
Actis, the

BARING PRIVATE EQUITY PARTNERS(BPEP), INDIA

BPEP India is an India focused private equity firm. The group targets mid-market transactions and looks for companies with excellent management, recognized brands, strong distribution.
 Baring had picked up a 10% stake in Jyothy Labs in

1999 for $4 million.  Another factor that attracted the fund to invest in the Indian company was its ability to improve and grow Henkel's brands like Pril, Neem and Fa deodorants.

BENEFITS OF PRIVATE EQUITY INCLUSION TO JYOTHI LABORATORIES

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It scales up Jyothi to one of the leading FMCG companies in India . y Jyothi Laboratories was able to raise about $150-$200 million funds from private equity funds. y The Indian maker of fabric whiteners and detergents is in talk with clutch of private equity funds in Jyothi laboratories.