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Mr Rohit Madan

    Mr. Rohit Madan, Associate Director, PE, KPMG was the sixth speaker of the day and he started his lecture at 2 pm.

His talk revolved around the concepts of Private Equity and the different aspects of it in the respect of Indian landscape. Private Equity, as he started, is raised by unlisted companies for their growth or expansion. It is mainly sector-agnostic investment except some dedicated funds for Healthcare, Infrastructure etc. The investors of PE funds get certain rights (like voting right) in the company.

He went on to explain the structure of such a fund and common terms like LP (Limited partners), GP (General partners), DVCF etc.

 Mr. Madan then started explaining the landscape of Indian PE market. It started mainly with venture capitals. In 2004, it saw PE transactions emergence and the market boomed. In 2009, due to global crisis, the market faced a decline in its growth graph. But it has already started to recover. Then again, Indian PE market is mostly a small market where one sees smaller deals like those with less than USD 20 million.

Then we were walked through the different deal stages of PE investments. The speaker informed us that most investments are being made on growth or later stages of a company. He also added that he doesn’t really see the point behind the absence of investments at earlier stages as PE is all about taking risks. More on deals, IT & ITES sector receives highest number of deals, followed by infrastructure. Also, he showed us some interesting deals in recent past, for example the one on Asian Genco, in power sector, with largest PE deal of $ 425 million by a consortium of investors (Morgan Stanley's infrastructure arm, Goldman Sachs and General Atlantic).

Moving on, Mr. Madan focused the discussion on exit policies when he compared Indian and China PE markets in terms of exits and said that China has a huge exit market. But lately India has also seen a good number of exits especially in 2010 wherein $ 5 billion was returned to PE investors. A discussion on different exit types like M&A, Secondary Sale, Buyback and Open Market followed after which he said that exit activities had been noticed across sectors. The PE market had seen some interesting exits in recent years like those of Jubiliant Foodworks and MakeMyTrip.

The key trends in 2010, as he continued, were mainly about the success of local fund managers in raising the funds, re-emergence of corporate backed PE firms, hiring of operating partners for high engagement and strong interest in Infrastructure, especially power.

He then showed the impact of PE on company portfolios - how PE affects the growth of a company, though inexplicably. Be it Annual Sales growth or annual PAT growth or annual wage growth, PE backed forms are generally far ahead of the non-PE backed ones

He also showed the result of 17 case studies on PE to focus on the values mentioned.