What Is Private Equity?
Private equity is an investment management company that provides financial backing and makes investment through various affiliated strategy like leveraged buyout, venture capital, and growth capital.
Lahan investasi bagi VC adalah pada bisnis startup atau perusahaan yang baru berdiri, contohnya adalah Gojek, yang memperoleh suntikan dana hingga 13 triliun rupiah, termasuk dari VC yang dikelola oleh Google.
Adapun contoh investasi yang dilakukan oleh Private Equity yaitu Bain Capital terhadap Burger King dan SoftBank terhadap WeWork. Tentunya, semua investasi yang dilakukan dimulai dengan analisis yang mendalam pada fundamental dari perusahaan yang akan didanai.
Acronyms Glossary
Bila perusahaan yang didanai telah berkembang, selanjutnya PE tersebut akan melakukan berbagai strategi seperti:
1. IPO (Initial Public Offering): Menjual saham perusahaan yang telah diakuisisi ataupun dari perusahaan PE itu sendiri kepada publik dan mendapatkan dana segar (fresh money) dari IPO tersebut. Selanjutnya dilakukan pengembangan.3. Recapitalization: Melakukan rekap dengan mendistribusikan dana ke sponsor finansial ataupun pada PE itu sendiri baik dari cash flow perusahaan ataupun dari sekuritas.
Benefit of Having a Private Equity:
1. Certification Benefit: Boost reputation.
Companies can use this stamp to promote its qualities, profiles, and reputation on the market. For example, if you want to enter a new market and you don't know anything about the market, your brand name is completely unknown, you can demonstrate that you have a very high reputation because the private equity investor decided to invest.
2. Networking Benefit
The private equity investor gives a strong support to the company, giving an access to his or her network, which means to multiply opportunities and interact with new suppliers and customers.
3. Knowledge Benefit
Knowledge could be soft knowledge. The capabilities to manage a team, lead a company, and how to negotiate with other players; but it could be something broader. For example, industrial knowledge, expertise in chemicals, etc.
4. Financial Benefit
That's the main reason why a company needs a private equity investor: for money.
Typically, financiers are represented by family and friends, by the founder, by the business angel, and by private equity investors, that we name in this case as venture capital.
Financing Stages
1. Seed Financing
Venture capital means seed financing, and early growth financing. The aim of an R&D project is not generate the product, but to generate a patent, and the patent could be transformed into a product. As you can understand the risk is very high in these cases because we have a research project.
Statistics from the market say that in seed financing we must have in mind the three numbers: 100,10, and 1. If you want to be a seed financier, you have to screen one hundred projects, you can finance only ten, and only one will be successful.
2. Startup Financing
Providing money to a company, willing to buy fixed assets and working capital to turn the key and start the enterpreneurial activity. In this case, The risk remains absolutely high as the private equity investor is going to bet on a business plan. For this reason, the PE has to negotiate in a very tough way to protect his / her own investment. That means, if the business plan is not successful, they can get their money back.
3. Early Growth Financing
When an enterpreneur launches a startup, the enterpreneur has got a certain idea of a business plan. But when the enterpreneurs start operating, this generates a gap in terms of money. If the amount of money gap is not that huge, the banking system could give some to fill the gap. However, if the gap is too big, a bank couldn't provide that, you need an equity investor.
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