Trends in Finance

-Ameya Oak
-Pratik Pujari
-Pranay Deshmukh
-Sanket Jadhav
-Sagar Nikam

Haath Mein Paisa toh.





Nai toh





-Very Popular proverb
Fund Raising Trends
Domestic
Venture Capital
Private Equity
International
ADR/GDR
ECB
Emerging (in India)
Crowd Funding
Venture Capital
Introduction

Venture capital (VC) is financial capital provided to early-stage, high-potential growth startup companies.
The venture capital fund earns money by owning equity in the companies it invests in, which usually have
a novel technology or business model in high technology industries.

History

The development of organized venture capital industry in India was slow circumscribed by resource constraints.
Risk Capital Foundation 1975 (IFCI)
National Equity Scheme 1976 (IDBI)
Programme for Advancement of Commercial Technology 1985 (ICICI)
TDCI and Regional Funds 1987-1994
Foreign Venture Capital Funds 1995-1998

Regulations

All venture capital funds are governed by the Securities and Exchange Board of India (SEBI).
SEBI (Venture Capital Funds) Regulations 1996
SEBI (Foreign Venture Capital Investors) Regulations 2000.

I read and understood nothing
What is VC?
Who is Venture Capitalist?
Why VC?
Why Venture Capital?
Benefits
Solid Capital base
Shares both risks and rewards
Practical advice
Network of contacts

What Venture Capitalists look for?
Pre requisite Good Business Plan
Management team, financial projections
Location of business, information concerning product/service and market analysis
Size and structure of investment and involvement of venture capitalists in
companys activities

Trends
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2007 2008 2009 2010 2011 2012 2013 2014 2015
Rupees in Crore
2007 2008 2009 2010 2011 2012 2013 2014 2015
Sector-wise (Rupees in Crore)
Year >
v Sector
2007 2008 2009 2010 2011 2012 2013
Information Technology 2169 2520 2864 3319 4322 4481 5325
Telecommunications 990 1076 4268 7469 7516 7086 7798
Pharmaceuticals 1076 1229 1478 1325 1132 1151 1106
Biotechnology 385 634 461 289 283 278 326
Media/Entertainment 470 906 1434 1006 1124 739 1406
Services Sector 2475 2976 3529 2677 2973 2809 3697
Industrial Products 2047 1951 2344 1355 2014 2107 2377
Real Estate 6348 6311 8185 9783 10831 9987 12048
Others 16749 24413 27158 20637 26673 26903 35535
VCI in India in 2013
8%
11%
2%
1%
2%
5%
3%
17%
51%
Percentage
Information Technology
Telecommunications
Pharmaceuticals
Biotechnology
Media / Entertainment
Service Sector
Industrial Products
Real Estate
Others
CIIs Business Confidence Index and
VCI growth
Findings
An exponential increase in VC from 2007 till date
Good amount of vci about to occur in 2014 and 2015
2015 will see VC investments of around Rs. 93400 Crore
Real Estate gets maximum share of Total Venture Capital Investments among different sectors
followed by IT and telecommunications
Services sector and Industrial products sector growing very slow
Sectors of Biotechnology and Pharmaceuticals declining trend and less hope
Positive co-relation shown between CIIs Business Confidence Index and Venture Capital
Funds
Increase in Confidence index signifies increase in total venture capital investments at the end
of the year



Venture Capital vs. Private Equity
Venture Capital Private Equity
Company Types Focused on particular sectors
like technology, biotechnology,
clean technology
Buy companies across all the
industries
Size of Investment Investments are smaller Firms make large investments
Structure Only Equity Combination of Equity and
Debt
Stage Invest in early stage
companies
Buys mature public companies
Risk & Return Invest small amount of money
in dozens of companies. Out
of the lot, many will fail, but a
couple of successful firms can
generate huge returns & make
the entire fund profitable.
No. of investments are smaller
and investment is much larger.
So, if 1 company fails,
possibility of entire fund will
fail.
Introduction:-
Private equity is a source of investment capital from high net
worth individuals and institutions for the purpose of investing and
acquiring equity ownership in companies.
History:-
The concept of PE investment prevailed in the country in one form or
another since the 1960s, the growth in the industry was mainly after
the economic reforms in 1991. Before that, most of the initiatives in
PE funding were from public sector financial institutions.
Why PE?
PE investments happen early in a firm's life. It is during the early stage
that companies have limited means to raise money from conventional
sources and look to sources such as PE to meet their funding
requirements.
IN
Regulations & Norms

Currently, there are no guidelines to regulate
the operation of PE funds.

SEBI set to regulate Private Equity very soon

Source: Bain-IVCA General Partner Research Survey 2014
Trends in PE Investments
26%
16%
The number of deals
jumped by 26%, driven by IT
and ITES, Healthcare and
BFSI.
Trends in PE Investments continued
Source: Bain-IVCA General Partner Research Survey 2014
Source: Bain-IVCA General Partner Research Survey 2014
Source: Bain-IVCA General Partner Research Survey 2014
Trends in PE Investments over the next 2 years
OVERSEAS FUNDING THROUGH
EQUITY
DEPOSITORY RECEIPTS
American Depository Receipt/Global Depository Receipt
Depository Receipt
Issued in America for Raising $
AMERICAN DEPOSITORY
RECEIPTS
Raising Dollars Elsewhere in World
GLOBAL DEPOSITORY RECEIPT
Process of Issuing Depository Receipt
Shares Being Traded in Overseas Market in Depository Receipt form
Foreign Investor
overseas Depository
Issue Depository Receipt to Foreign Investor
Domestic Custodian
(Retains rupee Denominated shares and Instructs overseas Depository to
Issue Depository Receipt
Issuing Company (Indian Company)
Issues Rupee Denominated Equity Shares to Domestic Custodian
History & Why ADRs/GDRs
JPMorgan introduced the first
ADR in 1927

Reliance Industries and
Grasim Industries First Indian
companies 1992

Exposure and raise
capital in the world market.

Diversifying Market Risk




NORMS IN ISSUING ADRs/GDRs
Issue shares to person Resident outside India


Which company cannot issue


Unlisted companies are allowed


IOSCO/FATF(International Organization of Securities Commissions)


Issued on the basis of the ratio


Two-way Fungibility


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450000
ADRs/GDRs IPO
Funds raised (Rs in cr)
From 2004 to 2014
Funds raised (Rs in cr)
SOURCE:www.primedatabase.com

External Commercial Borrowings
(ECB)

ECB are commercial loans availed from non resident lenders.

It Includes



Bank Loans

Securitized
Instruments
Suppliers
Credit
Buyers Credit
Loans from
Foreign
Collaboration/
Foreign Equity
Holder
Minimum Average Maturity must be Three Years
Source: www.rbi.org
Two Ways of Raising ECB










Regulator

The department of Economic Affairs, Ministry of Finance,
Government of India with support of Reserve Bank of India.



Automatic
Route
Approval
Route
Source: www.rbi.org
Why ECB Is Attractive
For Borrower
No Dilution in ownership
Considerably large funds can be raised as per requirements of
borrowers
Usually only a fixed rate of interest to be paid
Easy availability of funds because ECB is more appealing to
Investors

For Investor
ECB is for Specific Period, which can be as short as three years
Fixed Return, usually the rates of interest are fixed
The interest and the borrowed amount are repatriable
No owners risk as in case of Equity Investment
source: www.india-financing.com
External Commercial Borrowings

Advantages
Funds will be in foreign currency which can be used for payment
to foreign suppliers

Cheaper funds vis--vis cost of rupees funds

Availability of funds in case of large requirements as Global
financial market is a much bigger source of credit.

More flexibility in terms of providing security for ECBs


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2004-05 2005-06 2006-07 2007-08 2008-09 2009-10 2010-11 2011-12 2013-14
ECB Borrowings (in Million USD)
Source: www.rbi.org
Emerging Trend of Funding

What
Crowdfunding is solicitation of funds (small amount) from
multiple investors through a web-based platform or social
networking site for a specific project, business venture or social
cause.

Benefits

Challenges and Risk
Bubble and Balm

Present Scenario Of Organizations
How
Few Success Stories

Features and Future

Thank You
Professor Mrs. S.S Jape
Professor Mr. Milind Limaye

For inspiration, drive and technical assistance
given from time to time during the entire
process of work
Thank You
For patiently listening