Private equity investment is quite a tricky concept to understand. One must be highly aware of what it is all about and what all it entails before investing. Equity is all about raising funds for a company with no obligation of having to pay back the dividend to shareholders.
The concept is pretty vast, which is why it can be pretty risky to be applied on business. But to increase your chances of success and good returns on private equity funds in India, there are a few points you must keep in mind. We have narrowed it down for you. Take a look-
Stable cash flows:
A private equity investment is likely to be good as the deal get improved returns because a good portion of finance is being used for investment. Using a debt is known as leveraging company’s assets. Company must strive to also make considerable interest (monthly, quarterly etc.) and repayments. They can’t miss those payments either. If they succeed in this, banks will be open to lending as they can see company’s cash flow and its stability.
Know the company:
Before investing in the Indian real estate, ensure that you know the company well. Consult regular reports and enquire about cash flows etc., take note of the audits as well. Cross check for your safety as it is of prime concern. You can’t let your funds go waste in any case. If you do your research, it will be quite beneficial for you! So, learn about the company thoroughly.
Take wise counsel:
If you are new to the world of private equity then it would be a rather good idea to wise counsel from those who have investment their money on this platform before. You would easily find someone amongst your colleagues of friends who have invested their money and yield returns. Also, make sure to take counsel from someone you know as there many out there who may take you in the wrong direction in order to mint money.
Know when to exit:
Whatever industry/ company you choose to invest in, check the exit scene for them. It is also important to check the potential buyers when the business reaches a certain height.
Keeping these points in mind while making a private equity investment can turn out to be worthwhile giving you out humongous returns. Ensure tiniest of details to grab good deals and best investment returns.