1. By Pavan Kumar Vijay

2. SPECTRUM OF FUNDING OPTIONS
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--------------Preferential
Allotment
Preferential
Allotment
Private
Equity
Private
Equity
Venture
Capital
Venture
Capital
--------------
--------------

3. BENEFITS
Improvement and development of business
and strategies.
Enhancement of Brand Image of the
Company.
KEY CONCERNS
Close monitoring of
Funds
Board Nomination

4. PRE REQUISITES FOR ATTRACTING PRIVATE FUNDING
Good Management Team,
Well defined Business Model,
Competitive Positioning,
Strong Cash Flows,
Attractive Entry Price
Exit Opportunity to Investor,
High Returns to Investors
Sound Past Performance
Business Growth Strategies

5. PREFERENTIA
L ALLOTMENT
PREFERENTIA
L ALLOTMENT

6. Simple way to raise capital of the Company
Economical way to raise capital
No need to appoint Merchant Banker
PREFERENTIAL ALLOTMENT
(except in case of allotment to QIBs )

7. Equity Shares
Any other security Convertible into Equity
Shares.
Like: Warrants, Fully Convertible
Debentures, Partly Convertible
Debentures, Convertible Preference
Shares.
SECURITIES THAT CAN BE ISSUED ON
PREFERENTIAL BASIS:
SECURITIES THAT CAN BE ISSUED ON
PREFERENTIAL BASIS:

8. The Companies Act, 1956
SEBI (Disclosure and Investor Protection)
Guidelines, 2000 (Chapter – XIII & XIIIA)
Unlisted Public Companies (Preferential Allotment)
Rules, 2003
SEBI (SAST) Regulations, 1997
LAWS GOVERNING PREFERENTIAL ALLOTMENT
Listing Agreement

9. PROPOSED ALLOTTEES
Allotment to QIBs (not in
Promoter Group)
by companies
listed on
NSE / BSE.
OTHERS
Chapter – XIIIA of
SEBI (DIP) Guidelines
Chapter – XIII of
SEBI (DIP) Guidelines

10. Time Line- Preferential
Allotment
Relevant
Date
30 days
General Meeting
(10.05.2006)
Filing of
application
of
in-principal
approval
Despatch of
Individual
Notices
25 days
15 days (12 months in
case of QIBs)
Board
Meeting
Allotment
of Shares
Shareholders’ Resolution
must be implemented
within 15 days (12 months
in case of QIBs) except in
case of pending
regulatory approvals

11. Pricing Schedule
General Meeting
10.05.2006
Relevant
Date
10.04.2006
30 days
2 weeks
6 months
(26.03.06- 09.04.06)
(10.10.05- 09.04.06)

12. Lock in RequirementsLock in Requirements
QIBs Others
Existing
Holding
Preferential
Allotment
Existing
Holding
Preferential
Allotment
No Lock in For One Year,
except in case
of
Trading through
Stock Exchange
For Six
Months
PROMOTERS –
20% of Total
Capital - for 3
Years
Remaining – for
one Year
OTHERS –
For One

13. Currency of Security Convertible
into Equity Shares
QIBs OTHERS
FCDs/ PCDs/ any other
convertible Security –60
Months from the
date of allotment
Warrants convertible into
Equity Shares –
can’t be issued to QIBs
FCDs/ PCDs/ any other
convertible Security –No
time prescribed for conversion
Warrants convertible into
Equity Shares - 18 months
from the date of allotment

14. Preferential Allotments:
2000-01 to 2006-07
YEAR No. of
Issues
Amount
(Rs. Crore)
2000 - 2001 335 12330
2001 – 2002 243 4640
2003 – 2003 313 1912
2004 – 2005 1180 1745
2005 – 2006 4428 6966
2006 – 2007 8742 6974
Source: www.primedatabase.com

15. 1. HESTER PHARMACEUTICALS LTD.
2. ZYDEN GENTEC LTD.
3. SSI LTD.
4. SICAL LOGISTICS LTD.
5. GEMINI COMMUNICATIONS LTD.
6. VISTA PHARMACEUTICALS LTD.
7. CLUTCH AUTO LTD.
8. SUJANA UNIVERSAL INDUSTRIES LTD.
9. ANG AUTO LTD.
Source: BSE Website
RECENT PREFERENTIAL ALLOTMENTSRECENT PREFERENTIAL ALLOTMENTS

16. VENTURE
CAPITAL
VENTURE
CAPITAL

17. VENTURE CAPITAL
risk capital necessary to
Kick-start
a business idea
into a commercial reality
money provided by
professionals
who invest in young,
rapidly growing companies

18. In accordance with SEBI (Venture Capital
Funds) Regulations, 1996, VCF means:
fund established in
the
form of a trust
or a company
fund established in
the
form of a trust
or a company
Registered under
these Regulations
Registered under
these Regulations
has a dedicated pool of
capital
raised in a manner specified in the regulations
invests in accordance with the regulations
VENTURE CAPITAL FUNDVENTURE CAPITAL FUND

19. Venture Capital Investors
High net-worth individuals with appetite for
high risk / reward paradigm
Institutions diversifying investment portfolios
– Insurance companies, pension funds,
banks, etc.
Funds of funds
Governments acting as catalysts

20. Venture Capital: A BoonVenture Capital: A Boon
Resource for
supporting innovation,
knowledge based ideas,
technology
and
capital intensive
enterprises
Critical financial Support for
idea based enterprises
not available from
banks and institutions
High risk / high return finance
combined with hand holding

21. Venture Capital Investment Trends
in India
20
80
250
500
1,160
937
774
900
590
0
200
400
600
800
1,000
1,200
1,400
96 97 98 99 '00 '01 '02 '03 '04
Source: IVCA/AVCJ

22. IT and IT-enabled services
Software Products (Mainly
Enterprise-focused)
Wireless/Telecom/Semiconduc
tor
Banking
PSU Disinvestment
Media/Entertainment
Bio Technology/Bio Informatics
Pharmaceuticals
Contract Manufacturing
Retail
INVESTMENT VISTAS
FOR VCFs
INVESTMENT VISTAS
FOR VCFs
Rural, Retail & Finance
Wi-FI/ Wireless
KPO
Clinical Research
Health Tourism
Food Processing
Contract R&D
Chip Design
Multiplexes
Gaming
Security Systems
Wine
Alternative Energy
R&D Ventures
Web Initiatives
EXISTING UPCOMING

23. NEGATIVE LIST FOR VENTURE
CAPITAL FUND:
 Non Banking Financial Services
(excluding NBFCs registered with RBI and
categorized as Equipment Leasing or Hire
Purchase Companies)
Gold Financing (excluding companies
engaged in Gold Financing for jewellery)
 Activities not permitted under Industrial
Policy of Government of India.
Any other activity which may be specified by
Board in consultation with Government of India
from time to time.

24. PRIVATE
EQUITY
PRIVATE
EQUITY

25. Private Equity
Investment
Private Equity
Investment
High Growth perspectivesHigh Growth perspectives
Focus of Private Equity Investors:
Global CompetencyGlobal Competency
Competitive EdgeCompetitive Edge

26. PRIVATE EQUITY PROCESS
Total time taken for PE deal is 10 to 14 weeks
Issuance of Mandate
Preparation of Information Memorandum
Investors’ Marketing and Presentation
Meetings with Investors
Preliminary Term Sheet / Letter of Intent
Negotiations and Finalisation of Term
Sheet / Letter of Intent
Due Diligence by Investor
Sign Up of Share Purchase Agreement
2-3 weeks2-3 weeks
2-4 weeks2-4 weeks
4-6 weeks4-6 weeks

27. Sectors for
Private Equity
Investment…

28. Real Estate

29. Infrastructure

30. Financial services

31. Logistics

32. FMCG

33. Specialty Chemicals

34. Retailing

35. Life Science / Pharma

36. Manufacturing Engineering

37. IT & IT Enabled Services

38. Auto Ancillaries

39. Textiles