Opportunities in Private equity
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Transcript of Opportunities in Private equity
Opportunities in Private equity
May 2008
Agenda
Introduction to Private Equity (PE)
PE Growth Story in India
Benefits of Private Equity
Process of PE Investment
ICICI Group : Value proposition & credentials
Indian PE success stories
Introduction to Private Equity
Role of Private Equity - To help ambitious entrepreneurs to achieve success - fuelled by capital, business expertise and improved governance.
Private equity is medium to long term finance provided in return for an equity stake in growth oriented companies, which could be both listed and unlisted.
Private equity investment is a transformational, value-added ,active investment strategy
Agenda
Introduction to Private Equity (PE)
PE Growth Story in India
Benefits of Private Equity
Process of PE Investment
ICICI Group : Value proposition & credentials
Indian PE success stories
Growth of the asset class
Growth of Private Equity in India (2002 – 2007)
US$17.3bn
US$7.5bn
US$2.2bnUS$0.9bn US$1.5bnUS$0.9bn
356
145
635161
299
2002 2003 2004 2005 2006 2007
Source: AVCJ.
– Number of deals increased more than 5 folds since 2002
– Value of deals increased more than 18 folds to reach US$ 17.3 billion in 2007
6
Considerable diversification across industry
Number of
Deals
2002 2007
Value of
Deals
Telecom20%
Computer Related
19%
Information Technology 18%
Medical 10%
Financial Services 8%
Manufacturing 7%
Services Non-Financial 7%
Others 11%
Financial Services
35%
Telecom21%
Information Technology
14%
Manufacturing 10%
Computer Related 10%
Medical 5%
Others 5%
Financial Services
20%
Information Technology
13%
Transportation/Distribution 9%
Medical 8%
Telecom 7%
Computer Related 6%
Electronics 5%
Service Non-Financial 5%
Others 27%
Financial Services
34%
Telecom 24%
Construction 5%
Infrastructure 5%
Transportation/Distribution 5%
Medical 4%
Others 23%
Source: AVCJ.
7
Growth across segments
Number of
Deals
Value of
Deals
2002 2007
Buy-outs (MBO/MBI/LBO)
3%
Expansion/ Growth Capital
66%
PIPE Financing
13%
Start-up/ Early Stage
13%
Turnaround/ Restructuring 3%
Mezzanine/Pre-IPO 2%
Expansion/ Growth Capital
52%PIPE Financing
35%
Start-up/ Early Stage
6%
Turnaround/ Restructuring 4%
Buy-outs (MBO/MBI/LBO) 2%
Mezzanine/Pre-IPO 1%
Mezzanine/ Pre-IPO 9% Expansion/
Growth Capital
49%
Start-up/Early Stage
21%
PIPE Financing
18%
Buy-outs (MBO/MBI/LBO) 3%
Seed/R&D 1%
Expansion/Growth Capital
41%
PIPE Financing
32%
Start-up/Early Stage
16%
Buy-outs (MBO/MBI/LBO) 6%
Mezzanine/ Pre-IPO 5%
Source: AVCJ.
Agenda
Introduction to Private Equity (PE)
PE Growth Story in India
Benefits of Private Equity
Process of PE Investment
ICICI Group : Value proposition & credentials
Indian PE success stories
Benefits of Private Equity
Access to financial capital
- Expansion capital / Acquisition capital
- Restructuring business – MBOs, divestment, consolidation
- Restructuring of balance sheet
Business Development
- Providing networking linkages across the globe
- Helping develop new product lines and entering new markets
-Active support to secure domestic & global business partners
Access to globalBest
Practices
- Ensuring high standards of corporate governance
- Facilitating proper MIS systems for control and monitoring
- Ensuring maintenance of proper organizational structure
- Balance sheet management
Strategicvalue
addition
- Providing Risk management tools
- Facilitating outpacing of Competition
- Conceiving and conceptualizing New business line
- Gearing up for IPO
Agenda
Introduction to Private Equity (PE)
PE Growth Story in India
Benefits of Private Equity
Process of PE Investment
ICICI Group : Value proposition & credentials
Indian PE success stories
Indian PE success stories
PE Investment PE backed IPO ~ INR 1700 cr PE Investment in 2000 PE backed IPO ~ INR 130 cr
0
100
200
300
400
500
600
700
800
2004 2005 2006 2007
INR
cro
res
Sales EBIT Profitability
PE Investment of INR 140 cr
ABG SHIPYARD
PE backed IPO ~ INR 128 crPE Investment in 2003
Source: moneycontrol.com
SHOPPER'S STOP
0100200300400500600700800900
1000
2004 2005 2006 2007
INR
cro
re
Sales EBIT Profitability
INR
cro
re
PVR CINEMA
0
50
100
150
200
250
2004 2005 2006 2007
Sales EBIT Profitability
INR
cro
re
SUZLON
0
1000
2000
3000
4000
5000
6000
2004 2005 2006 2007
Sales EBIT Profitability
Agenda
Introduction to Private Equity (PE)
PE Growth Story in India
Benefits of Private Equity
Process of PE Investment
ICICI Group : Value proposition & credentials
Indian PE success stories
Pre-IPO Placements
Strategic financial advice
Mezzanine/ hybrid
financing
Valuation and pricing
analysis
Debt syndication
Private equity
Mergers, acquisitions
and disposals
Deal structuring
Management Buyouts
Listed company Financing
Debt/ Structured Financing
Venture/ Developmental Capital
Takeovers
ValuePublic to Private
transaction
ICICI
Full spectrum of services throughout the corporate development cycle
ICICI Group : Value proposition (1/2)
ICICI Group: Value proposition (2/2)
IB services portfolio
HNIs / Family offices / Financial Institutions : Middle East, UK, US, South Africa, Singapore
+
Access to prominent India dedicated PE funds / Financial institutions / HNIs
Investment banking capabilities
PE syndication, structured finance and advisory, acquisition funding
ICICI Group companies
ICICI Securities for Capital Market access, ICICI Ventures
Investors Base
Integrated Investment banking services, with access to best of breed global and domestic investors, offering value throughout the lifecycle of company
ICICI Group: Credentials ( 2004 – 2007 )
McLeod Russell
Acquisition of Doom Dooma Tea
Company
USD 17 million
Advisor
Sale of assets and financial
restructuring
Advisor
Acquisition of spirits business of
Shaw Wallace
USD 300 million
Advisor
Acquisition of spirits business of
Shaw Wallace
USD 300 million
Advisor
Employee buyout of Tata Tea plantations
USD 13 million
Advisor
Acquisition of Corus Group PLC
USD 12.8 billion
Financing
Acquisition Hansen Technologies
USD 565 million
Structuring & Financing
ICICI Group: Credentials ( 2004 – 2007 )
Acquisition of Whyte & Mackay
USD 1,188 million
Advisory & Financing
Acquisition of Whyte & Mackay
USD 1,188 million
Advisory & Financing
Acquisition of REpower
USD 1,560 million
Structuring & Financing
Acquisition of a South African
tyre manufacturer
USD 62 million
Guarantee facility
Acquisition of Keyline Brands
GBP 18 million
Sole Arranger
Employee buyout of Tata Tea plantations
USD 13 million
Advisor
Acquisition of Negma Labs
USD 266 million
Structuring & Financing
ICICI Group: Credentials ( 2004 – 2007 )
Art Auction Company
Fresh Equity Issue
USD 8.5 million
PE Syndication from HNI investors
Equity Broking company
Management Buy Out
USD 11 million
Coinvestment with PE fund
Infrastructure Company
Fresh Equity Issue
USD 28 million
PE Funding
Power Transformer Manufacturing
Company
Fresh Equity Issue
USD 18.20 million
PE Funding
Garment Manufacturer
Fresh Equity Issue
USD 5 million
PE Funding
ICICI Group: Credentials ( 2004 – 2007 )
39%19%
6%3%
28%
Capital Goods Consumer Goods Chemicals
Healthcare Electronics Auto/ Ancillaries
Others Hospitality Software
M&A Deals by Industry (2004-07) M&A Deals by Geography (2004-07)
18%
14%13%
7%
6%3%
16%
6%
12%
Germany US Norway ScotlandDomestic Belgium France EgyptUK Ireland Uzbekistan SwitzerlandSA Netherlands Australia Italy
Agenda
Introduction to Private Equity (PE)
PE Growth Story in India
Benefits of Private Equity
Process of PE Investment
ICICI Group : Value proposition & credentials
Indian PE success stories
Process of PE investment : Indicative timeline (3–6 m) After a formal mandate
1 2 3 4 5 6 7 8 9 10 11
Data collection and IM preparation
Marketing and prospecting investors
Concalls and meetings conducted with potential investors
Discussions over Valuations and rights
Term sheet
12
13
Shareholder/share purchase agreement
14
Commercial and Legal DD
Agreements discussion
Funding disbursement
No of weeks
Thank you
Contact information Amit Ratanpal, [email protected] Aishwarya Parthsarthy, [email protected], +91 9833245675 Himani Bhalla, [email protected], +91 9867596685 Purna Mishra, [email protected] +91 9833299827
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