Private Equity Trends and Exits in the Indian Market

Abstract

Private equity (PE) investors provide capital to private companies, usually for expansion, new product development, or restructuring of the company’s operations, management, or ownership. As the firm grows, PE investors sell their stakes in the company either to return the capital to the limited partners or to find new investee companies. At the same time, owners of the company might either look for other sources of capital for new projects or look for ways in which they can sell off their stake and exit. There are four major exit outcomes for private equity investors: initial public offering (IPO), financial sale, strategic sale and buyback. The major difference between IPO and other mechanisms is that an IPO involves a large number of dispersed investors whereas the other three mechanisms involve a single or very few investors.