Private Equity

A weaker INR and a slowdown in economic growth of 5 % has impacted opportunities and growth of the PE segment.

The growth of Private Equity (PE) segment and Venture Capitalist (VC) segment is vital in fuelling the growth of entrepreneurs and Institutions in India as the risk reward payoff is in India’s favour. Private Equity in India is still in its infancy compared to the more-developed regions. The growth prospects, combined with a growing domestic market of over 1.1 billion population, are increasingly attracting international investors. PE investors are especially welcome as capital shortages keep the valuations low compared to long term value creation.

Talented Private Equity Firms and Venture Capital investors with patient capital will do well in India. Though banking and financial investors comprise of over 40% of the investors, most of the investments are small to medium size ranging from USD 5- 25 Million. The Small and Medium Enterprises (SMEs) in India is an emerging segment and is looking at various avenues for raising funds, including being listed on Stock Exchanges.

Challenges for PE/ VC Firms in India

PE money is expensive as is the process of investing. Over 1,000 PE’s and VC’s are invested in over 2000 companies in India. Well established VCs and PEs in India have deep experience as well as good client relationships, excellent market intelligence, and a good understanding of the social factors that may impact their business and net worth.

Some of the challenges
  • Lack of well established domestic market intelligence relating to entrepreneurs, financiers, firms and research institutions
  • Challenging operating environment, lack of transparency and standard business practices including family developed management practices at the smaller firms
  • Difficulty in finding talented local resources that understand the complexities and have the capability to effect change
  • A complex legal system and tax environment
  • Multiple regulations and little harmonization of guidelines between SROs and across government agencies like SEBI, RBI, CBDT, ministry of company affairs etc. As on date, there are no clear cut guidelines for Private Equity investment
In India, PE firms are engaged in hand-holding of companies including building professional management. This, coupled with the slow down also affects the exit period for the PEs to an average 3.5 to 4 years, thereby rendering the already expensive funding more dear. However this also acts as an opportunity to provide an additional round of financing to the invested companies better understanding of ground realities.
PIVOT’s role in VC/PE Invested Companies in Financial sector
Core strengths Keeping our faith in the ability of the founding team to develop their business, we work with the owners, to achieve a significant increase in the value of their business. By adapting to inevitable changes in their plans, we focus on growing with their companies. Our strategy is based on the understanding of the key drivers especially in the Securities services and Brokerage segment.
Our expertise for diverse segments
PIVOT has handled a number of diverse assignments including:
  • Setting up New Custodian
  • Review and Due Diligence of a prospective takeover
  • Interaction with Regulators and exchange
  • Advising leading financial Institution in FPI
  • Advised a Leading financial Conglomerate on Custodial Services
  • Advised a leading worldwide Private Equity Firm on Securities services segment
  • Business development and Business Transformation for the largest Pan India Custodian operating on a non- conflict business model
  • Global securities Services Company planning, to set up securities services business in India
  • Advised a leading BPO on Sales and Client strategy
By client type

Private Equity Firms: Invested in a financial Company can rely on PIVOT team to undertake due diligence about the business, support the management and provide advisories on the segment. We assist in market sizing, evaluation of products and business strategy; strategic alliances, formulation, implementation, and monitoring of key initiatives. PIVOT will proactively work towards value enhancement, so as to create a viable road map for exit. The availability of multiple exit options forms an important component in valuation and investment decision.

Promoters: PIVOT's team assist promoters seeking business transformation and implementation of best practices, and in developing value added products. PIVOT’s team help clients in understanding and implementation of key drivers, training and development of resources, seeking strategic alliances, increase profitability and market share.

CPAs and Legal Firms: CPAs and Legal firms have focussed on core competencies; however they are increasingly sourced by clients for inputs on existing business practices, business models, and a greater understanding about key drivers that can help establish or build their clients’ businesses. This in turn has assisted their clients in business decisions, market information, market share, business transformation etc. We have experience in assisting leading consulting firms in the said arena wrt Indian Capital Markets.

We aim at strengthening and developing the performance of the target company through taking an effective role in the clients invested company, so that we can provide the needed solutions ranging from business plans, expansion plans, turn-around and restructuring plans, to mergers and acquisitions, in addition to providing management, financial and operational improvements.

In our assignments we have proven that good practice and sound governance changes performance.