Initial Public Offer (IPO)
IPO, the traditionally preferred route, is the method whereby the investors will have a right to offer their shares for sale to the public and then exit. The most evident benefits include longer-term shareholding benefits to the investor in the company and higher valuation, which is dependent on the prevailing market conditions. However, the listing of the shares of a company is subject to strict regulatory requirements and restrictions, which make the IPO a lengthy and expensive process. Despite the cumbersome process, IPO exits are seen as the primary mode of exit. Instances of IPO exits in 2013 are SAIF’s exit from JustDial and TPG’s exit from Shriram Transport Finance. Apparently, for PE investors, what made a good year for exits the great year was the strength of IPO channel in 2013. The number of IPO’s for buyouts soared 67% worldwide from 112 in 2012 to 187 in 2013.
An exit via put-option involves a put option right with the PE investors on shares of the promoters of the company. Previously, Reserve Bank of India (RBI) was of the view that the put-option exit arrangements are not valid because it is a guaranteed exit at a guaranteed price which is equivalent to an external commercial borrowing. This view taken by RBI left the PE investors in dilemm...
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Put Option exit pricing may hurt PE investors, available at http://www.business-standard.com/article/markets/put-option-exit-pricing-may-hurt-pe-investors-114010801566_1.html
(2008) 143 Comp Cas 2004 (BOM)
2012 (114) Bom LR 1002
Brooke Tucker, Differences between Strategic and Financial Buyers, Tucker Capital Advisors LLC, 2005.
Private Equity investors find new ways to cash out, available at http://www.thehindubusinessline.com/features/investment-world/private-equity-investors-find-new-ways-to-cash-out/article4542042.ece
Private Equity roundup India, Ernst & Young, 2013.
Talking exits: Changing trends in private equity exits, available at http://www.business-standard.com/article/markets/talking-exits-changing-trends-in-private-equity-exits-113081900585_1.html
A maturing market: Asia-Pacific private equity outlook 2014, Ernst & Young, 2014.
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