Anecdote by Mr Nanda
to doctor = “ I am down, with a strange illness”
= “ What happened ? “
= “For 20 years, I see a dream, and it is the door to success, I am
pulling, but it not opening up. I am
getting mad. Help me.”
= Today focus on the door
day, he came again
= Again, I dreamt same dream. Again Door appeared.
For 2 hours I pulled on the door, then, I remembered,
to “Focus on the door”
When, I focused, I saw a small slip on which was written -
I just gave a small push, and the “Door to opportunity opened”
Moral of the story :
We must know what is correct, and how it is to be done
If we don’t know the intricacies of the Private Equity
market, we will never know how to click a correct deal.
So, prepare yourself
topic : Importance of “Pre-Due-Diligence”
Mr Nanda said, = “Due diligence(D.D., for short) is ok.”
But actual real, pre-due diligence is most important. When DD comes, and if it
finds that everything that he wanted to find out is readily available and also
is ok/as per industry standard norms, he is very happy. This will increase the
confidence level .
If instead, the company calls the PE, before preparation,
then it (may) create a bad word-of-mouth, of that company in the market.
Discussed a Case of a company à First PE happened at Rs.1500/share
in Sep 2007.
Then, the Stock Markets crashed.
Yet, after 6 month, when it wanted funding for the new
project, it was able to sell further stake, (20% more of its equity), and this
time not at lower, but at rate of Rs. 3500/Share.
Moral of the story : Yes it is possible
. If your company credentials are good, and if intentions are good, you
can win, even against the market tide.
to bring money into the company “in Phases”.
Understand the cost first.
Understand what you have to give.
Go for phased money coming in.
Eagerness of lumpsum hints of some eagerness or even greed.
Prefer to plan to get funds in small bullets, example :
Dilute just 5% every year , in 4 tranches. This way, you will get better
valuations, in every successive tranche.
From Apr-08 Basel II norms, have been made applicable in some
And thus, in all listed co, a compulsory post of Risk
Compliance Officer is required.
They must calculate risks in the organization, and their
mitigation steps being taken by the company.
Every organization , every
business has some risks. There are Certain system risk
Some are calculated risk, anyway business runs on risk. And
some are system risk, personal risks, Governmental risks, competition risks,
the stakeholders want you to share the knowledge of those risks from you.
So, that they can take an informed decision.
The Core message of this session was that there are numerous
methods of valuation, but the “Perfect Right figure” is in the Eyes and
Hearts of the Two parties.
Mr Lalit Chaudhary, Senior Vice
President, & Head of Private Equity and Growth Capital at LEHMAN BROTHERS,
So, from as low as Rs. 100 per share to as high at Rs. 500
Different methods were discussed, like
Each has its own merits and demerits, so, actually a
combination of all the above is made. If more than 26%, I get control, and in
that case, a control premium is also paid up.
Message to the Directors and CFO’s present in the meeting was
If you already have a PE on board, then, getting funds for
the next round of Capex becomes very very comfortable. Especially, if your
corporate governance parameters are good, ERP is running fine, and your cash
flows are positive.
System of Accounting
Today the PE’s calculate sustainability and valuations,
much like the ancestral “Parta system” in Marwari Community in