Private Equity Solutions

About BRICS Private Equity Solutions

Private Equity is the equity capital that is not quoted on a public exchange. Private equity consists of investors and funds that make investments directly into private companies or conduct buyouts of public companies that result in a delisting of public equity. Capital for private equity is raised from retail and institutional investors, and can be used to fund new technologies, expand working capital within an owned company, make acquisitions, or to strengthen a balance sheet.

The majority of private equity players consist of institutional investors and accredited investors who can commit large sums of money for long periods of time. Private equity investments often demand long holding periods to allow for a turnaround of a distressed company or a liquidity event such as an IPO or sale to a public company.

BRICS is in a unique position to leverage its vast connections with major PE players focussed on India across industries and service sector to cater to the following private equit requirements of its clients:

Mezzanine Funding

Mez funding is a hybrid of debt and equity financing that is typically used to finance the expansion of existing companies. Mezzanine financing is basically debt capital that gives the lender the rights to convert to an ownership or equity interest in the company if the loan is not paid back in time and in full. It is generally subordinated to debt provided by senior lenders such as banks and venture capital companies.

Since mezzanine financing is usually provided to the borrower very quickly with little due diligence on the part of the lender and little or no collateral on the part of the borrower, this type of financing is aggressively priced with the lender seeking a return in the 20-30% range.

Mezzanine financing is advantageous because it is treated like equity on a company's balance sheet and may make it easier to obtain standard bank financing. To attract mezzanine financing, a company usually must demonstrate a track record in the industry with an established reputation and product, a history of profitability and a viable expansion plan for the business (e.g. expansions, acquisitions, IPO).

BRICS arranges the Mez Funding for its clients.

Promoters’ Financing

Promoters of the company require funding to meet their equity holding requirements for the expansion/additional capital infusion and/or for any other purpose. Such funding is normally against the equity shares (preferably listed) and any other valuable asset. BRICS arranges Promoters’ Financing for its clients.

Bridge Financing

Financing for the intermittent period of either IPO or pending any loan sanction or equity placement is Bridge Financing. For any project when the borrower need quick financing to start the project or to pay advances to start the project, then borrower can use bridge financing which is repaid out of the formal project finance/loan. BRICS arranges Bridge Financing for its clients.

Acquisition Financing

To acquire the target company, the acquirer may use mix of own resources and acquisition financing. RBI does not allow the banks to finance the acquisitions. NBFCs and international financial markets are the right source to seek acquisition financing. BRICS arranges Acquisition Financing for its clients.

LBO/MBO

When the acquirer uses the assets of the target and leverage those assets to fund/part fund the acquisition then it is called Leveraged Buy Outs. When the management (duly sponsored and majority funded by any fund or PE player) buys out the existing promoters/owners of the company then it is called Management Buy Outs. BRICS arranges LBO/MBO financing for its clients.