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PRIVATE EQUITY

INDEX
1. 2.

3.
4. 5. 6.

Introduction of Private Equity Advantages of PE Firm and PE Flowchart Comparative Analysis of list of Major PEs in India History and Journey of Jyothy Laboratories Brief about Actis and Baring and Proposed Acquisition of Henkel Conclusion

INTRODUCTION
What is Private Equity ? (PE)

Private Equity, in finance, is an asset class consisting of equity securities in operating companies that are not publicly traded on a stock exchange. What is Private Equity Firm ?
A Private Equity firm is an investment manager.

So what exactly Private Equity Firms do? They buy companies and then sell them (hopefully) at a profit in a few years.

The PRIVATE EQUITY PROCESS


Private equity firms raise funds e.g. ABC Fund I, ABC Fund II
Within each fund, the private equity firm is a General Partner (GP). GP directly invests 1% of the fund. All other investors are Limited Partners (LP) and they invest 99% of the fund. GP LP is an important distinction both for legal purposes and also for understanding how PE process works The fund itself is structured as a limited partnership Funds invest in multiple companies, acquire a controlling stake (usually 100% of equity) IRR threshold is 20-25% depending on size of the fund Lifetime of fund is ~ 5-10 years, this means that all companies in the fund must be sold within this period.

FLOWCHART OF PRIVATE EQUITY

ADVANTAGES OF PE FIRM
1) Private Equity funds are used for expanding working

capital. 2) Private Equity funds are helpful when it comes to facilitating mergers and acquisitions. 3) Private Equity funds makes a companys balance sheet stronger and help it in developing. 4) Private Equity funds are a great way to obtain funds small businesses and start-ups that has not been able to get loans or grants.

5) The general partner runs the company, so the investing partner or the limited partner cannot interfere in the management of the company.

PRIVATE EQUITY PYRAMID

PE TREND Comparative Analysis of List of Major PEs in India


2.5 2.0 1.5 1.0 0.5 0

74 66 59 46 43 43 0.9 0.8 1.0 0.7 1.6 1.4 58 1.7 70 1.6

76 2.2

80 70 60 50 40 30 20 10 0

Value

Volume

Dealtracker
2011 Quarterly

Most Active PE Sectors


Banking & Financial Services
8 6 4 2

IT & ITeS
500 400 20 15

413

156 98 11 10

17 98

200 150 100 50

5 56 74

300 200 100

10
5

Q1 2009 Q1 2010 Value Q1 2011 Volume

Q1 2009 Q1 2010 Value Q1 2011 Volume

Pharma, Healthcare & Biotech


5 4 3 2 1 Q1 2009 Q1 2010 Value Q1 2011 Volume

4 110 3

150 100

20

50 -

Power & Energy


8 6 4 300

Real Estate & Infrastructure Management


10 8 6

9 229 174 173 4

300 200 100 -

218 5 78

200

90 1

2 Q1 2009 Q1 2010 Value Q1 2011 Volume

100 -

4 2

Q1 2009

Q1 2010 Value

Q1 2011 Volume

2011 Grant Thornton India. Member firm within Grant Thornton International Ltd.

MOST ACTIVE PE SECTOR Banking and Finance Services

INVESTOR Texas Pacific Group (TPG) TVS Capital Standard Chartered Bank

INVESTEE Sriram Capital The Ratnakar Bank Ltd. United Stock Exchange

IT & ITeS Pharma, Healthcare and Biotech


Power & Energy

MyFirstCheque Walden International Integrated (Mauritius) Healthcare Holdings Ambit Pragma Ventures
International Finance Corporation

MeriCAR.com BankBazaar.com Apollo Hospital


Beams Hospital Pvt. Ltd. Simran Wind Project Pvt. Ltd. Shalivahana Green Energy Ltd. GR Infraprojects Ltd.\ KMC Infratech Ltd. Subsidary of KMC Construction Ltd.

Real Estate and Motilal Oswal PE Advisors Infrastructure Management Pvt. Ltd. 3i India Infrastructure Fund

JYOTHY LABORATORIES
Jyothy Laboratories came into being in 1983, powered

by the vision of one man M P Ramachandran - the current Chairman & Managing Director. Started as a proprietary concern, manufacturing and selling a single product in a single district, the organization has grown to become a multi-brand, multi-product company with operations all over the nation.

Its Journey
YEAR 1983 ROAD TO SUCCESS Signals the start of the Jyothi Laboratories saga with the launch of Ujala.

1984

Jyothy Laboratories first marketing team 6 sales girls reach Ujala to home in Trisur and Mallapuram districts in Kerala.
Ujala spreads its sphere of influence in Tamil Nadu. Ujala lunched in Karnataka and Andhra Pradesh. Company incorporated as Jyothy Laboratories Ltd. factory established in Chennai to manufacture Ujala. Ujala launched in West Bengal. Manufacturing plant starts operations in Pondicherry. National roll out of Ujala. Ujala becomes a INR 100 Crores Brand. The new millennium sees Jyothy Laboratories Ltd. diversify into the Household Insecticide and Utensil care segments with the with the lunch of MAXO and EXO.

1987 1991 1993 1994 1995 1997 1999 2000

2001

MAYA Incense Sticks launched. Tata Chemicals detergent plant at Pitampura, Madhya Pradesh acquired by Jyothy Laboratories Ltd. Sri Sai Om Cares state-of-the-art mosquito repellant coil production facility at Hyderabad acquired by Jyothy Laboratories Ltd. JEEVA Ayurvedic soap launched.

2002

2003
2004 2005

MAXO bags the AAA Brand Performance Award, Ujala washing powder launched in Kerala.
MAXO crosses the INR 100 Crores mark. Ujala Stiff and Shine launched in Kerala. Jyothy Laboratories Ltd. enters into a JV with Godrej Tea Limited to distributes its Godrej Tea Brand in India. Jyothy Laboratories Ltd. enters into a JV with CCL Products (India) Ltd for the marketing and distribution of coffee under the Continental Special Brand. Jyothy Laboratories Ltd. goes public with its IPO. Launch of Jyothy Fabric Care Services Ltd. and Fabric Spa.

2006

2007 2009

Proposed acquisition of Henkel Laboratory


On 17th march 2011, Jyothy Laboratory has acquired

a 14.9% stake in Henkel India from Tamil Nadu Petro Products Ltd for Rs 60.73 crores.
The impact of this was the sudden growth in share

prizes of Henkel India.


The move helped Jyothy, ramp up its share in the

fast-growing domestic detergents market.

Actis of Private Equity


Actis is a leading private equity investor in emerging

markets.
Actis's sector approach is inevitably shaped by the

evolving needs of the countries and economies in which we operate.


Actis's dedication to emerging markets helps

stakeholders understand and manage risk, interpret policy and deal with regulators.

Baring of Private Equity


Baring Private Equity Partners (BPEP) invests via four

regional fund groups with local investment teams in Russia, Asia, Latin America and India.
They provide investment advisory services to Baring

Funds.
It uses a top down approach in selecting desirable sectors

for investment.

PRIVATE EQUITY EXITS


Exits can be of the following types:
IPO

Sale to another PE firm


Sale to a strategic investor

Any fool can buy a company. You should be congratulated when you sell. - Henry Kravis, founding partner of KKR

CONCLUSION
Private equity firms have become attractive investment

vehicles for wealthy individuals and institutions.

As the industry attracts the best and brightest in

corporate America, the professionals at these firms are usually successful in deploying investment capital and in increasing the values of their portfolio companies.

It is imperative that these firms develop strong relationships with transaction and services professionals in order to secure strong deal flow.

THANK YOU
Guided By: Prof. Abhilashita Rao Presented By: Tejinder Kaur Nidhi Chaudhary Neha Soni Sudhir Dahiya Rishabh Juneja Achint Mathur