Private Equity Demystified

What exactly is private equity and why there is so much buzz around it. Private equity emerged in the 1980s with the KKR group. These PE firms provided cash for companies to go private. Going private helped the companies to run it the way they wanted. The PE firms were run run by investment bankers who brought considerable expertise to these companies.

There is also another concept called Ventue Capital (VC). Here smaller companies which are cash trapped and are too small to list in the exchanges are helped by VC firms by taking a stake in the comapny and help them towards a growth path. Thus providing them both with the cash and the technical expertise

In India private equity is relatively young. It started with the IT boom towards the end of 90s. In recent years a number of these companies have come up due to stock market boom and the growing Indian consumer market. Global firms such as Blackstone and the Carlyle Group have a presence in India and are scaling up their operations.

Indian players like ICICI Venture are also growing rapidly in this market space. The next big question is how do these firms make money?

Essentially, PE funds raise money from high net worth individuals and financial institutions, for a period of 7-10 years and then invest in opportunities as and when they arise. The firms valuate companies and take a stake depending on how much is the company actually worth, how the company will grow etc.

Post stake taking, day-to-day monitoring and growth plans are monitored by the fund, with a senior director taking a seat on the company's board. Since the target is also to exit the investment in a few years and return money to investors, the deal team also constantly monitor the capital markets for suitable times to do an Initial Public Offering (IPO) or find a strategic investor to sell to

Trillion dollar war

It has been 5 years since the invasion of Iraq. Has anything been at all achieved over these 5 years. Its a trillion dollar question. Why? Beause it is estimated that the cost of the war (both direct and indirect) so far has been around 3 trillion dollars. And also there is the human losses which amounts to thousands of Iraqi civilians killed, millions displaced due to ethnic tensions and American soldiers killed during their patrols.

The main reason for this war according to the US president was that Saddam Hussein was possessing weapons of mass destruction and that there was link between him and terrorists. All that was proven wrong and it was actually after the invasion that Iraq has become a breeding ground for terrorists.

Had this war been not fought the money ould have been used for useful purposes in the US and for providing aid to other poor countries in tha African continent.

The burning issue of climate change could have been better tackled using this money by allocating funds to make greener technlogy.

But President Bush does not want to look at it this way. His only aim was to invade Iraq and defeat Saddam Hussein no matter how much the cost of the war. His economy is now running on a huge budget deficit. His legacy would be passing on the ruins of Iraq war and giving the nation a huge budget deficit

India Inc's Growing Influence

Reliance Power's Black Magic

We are witnessing a tremendous influence of India Inc worldwide. Few of them are Tata's acquisition of Corus Steel and Jaguar, Suzlon Energy acquiring Hansen Group and Dr. Reddy's Labs' acquisition of Betapharm to name a few of the big acquisitions.

To add to this growing list Reliance Power (the flagsip of ADAG) has a deal worth 1,000 crores with one of the coal mines in Indonesia. The coal mine is estimated to have a reserve of 2 billion tonnes. Whereas, the largest reserve of coal mines in India which is Gevera in Chattisgarh has a resrve of about 1.2 billion tonnes.

Reliance Power's Krishnapuram power project will be fed by the fuel form this acquisition. The fuel from this project will also be used for other power projects in the country.
Given the amount of money spent in acquisitions and the returns earned from them,
one thing is sure "India Inc is growing and growing fast"

Great books – review

Hi all, I just wanted to share some knowledge about the best books I have read. I wouldn't call it a review, just an information for those book lovers who are looking for good books to read

The book that tops my list is Prey by Michael Crichton. I basically had no interest in reading english novels. The book that changed my opinion was Prey. It was a science fiction book dealing about Nano technology.
The author made me to feel each and every situation in the book and for a first time reader it was a fantastic experience. A review of this book can be found in the below link
http://www.complete-review.com/reviews/popus/crichtm.htm
Its a must read for all those science fiction book lovers. If you want to download an electronic version of the book you can do it on
www.esnips.com
The next one on my list is Holcroft Covenant by Robert Ludlam. Wow!! was the only word that came out when I finished reading that book. It was a fantatic written book by one of the greats Robert Ludlum.
It is a story about a person named Holcroft who finds himself in a position to fulfill his father's will written some 50 years ago. What comes next was purely unexpected. When some people try to pursuade him against fulfilling the will, they mysteriously die.
Its a nice plot with the hero portrayed as timid and the villain with great skills. A complete review can be found in the below link
http://www.mouthshut.com/product-reviews/Holcroft_Covenant___The_-_Robert_Ludlum-925051466.html

Some of the other books I really enjoyed were

The Da Vinci Code by Dan Brown (Fiction)
Mega Living by Robin Sharma (Motivation)The Alchemist by Paul Coelho (Motivation)
Hope you read these books and enjoy as much as I did. Have a great time reading