PE Symposium 2008

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The Event

The Finance Society
Faculty of Management Studies

Presents

Private Equity Symposium 2008

at ITC Sheraton, Delhi
on 20th September 2008

List of speakers

Key Note Speaker - Mr. Gopal Nair, Director, Capital markets, Ministry of Finance

Session 1
Private Equity: The road ahead for “Brand” India
Time : 11:30 - 13:00 hrs

• Mr. Randhir Kochhar, Director, DE Shaw Advisory
• Mr. Sajeev Krishan, Executive Director, PwC
• Mr. Shailesh Pathak, Senior Director, ICICI Ventures
• Mr. Pinaki Bhattacharyya, Principal, IDFC Private Equity
• Mr. Ajay Kapur, CEO, SIDBI ventures
• Mr. Vivek Shekhar, Chairman and CEO, 2i Capital
• Mr. Munish Dayal, Senior Partner, Baring Partners

Session 2
Growing Chase for the right Buyer
Time - 14:00 - 15:30 hrs

• Mr. Rahul Raiurana, Managing Director, Standard Chartered, PE Advisory
  
• Mr, Ravip Shankar, Director, Global Markets, Deutsche Bank
• Mr. Ajay Tandon, Director, Citi Ventures
• Mr. Deepak Chhabria, Director, Equities, Collins Stewart
• Mr. Sunil Godhwani, CEO and MD, Religare
• Mr. K Mahesh, Senior Vice-President, I Banking, Edelweiss Capital
• Mr. Tarun Khanna, Director, I Banking, Yes Bank

Schedule for the day

11:00-11:30
Inauguration Ceremony and Key note address
11:30-13:00
Panel discussion on ‘Private Equity: The road ahead for “Brand” India’
13:00-14:00
Lunch
14:00-15:30
Panel discussion on ‘Growing Chase for the right Buyer’
15:30-16:00
Tea

For delegate Passes contact Gaurav Puri ( # 9810391503)
The passes are available for Rs 2500 per person ( this includes both the sessions + lunch + tea + breakfast). Also available are special discounts on more than 5 participants.

News this Week

The buzz this week started with Infosys acquiring Axon Group for $ 753 million which is by far the largest overseas acquisition by an Indian IT company. The only other 2 acquisitions of Infosys have been Expert Information Systems Pvt. Ltd and the back-office services assets of Royal Philips Electronics.

More takeovers were witnessed with the Oil and Natural Gas Corporation buying Imperial Energy, an oil-exploration company working in Russia, for $2.6 billion. The funding will be treated in its books, as a loan to ONGC Videsh Ltd.

News on a relevant topic, considering FinSoc’s upcoming Private Equity Symposium-Reliance Capital, a subsidiary of the Reliance Anil Dhirubhai Ambani Group (ADAG), has set up a $1-billion private equity fund to focus on sunrise sectors such as services, logistics, realty and pharma.

Coming to the volatile situation in Singur the Tatas were struck a double blow this week, with the imminent closure of the Nano plant, and the abandonment of their $3-billion investment plans in Bangladesh due to political instability.

On a positive note, long awaited reforms were finally implemented with the Union Cabinet’s clearance of the Companies Bill, 2008, that calls for stricter disclosure norms, speedier incorporation of companies, more powers to shareholders to streamline the approval process for mergers and acquisitions, offering scope for expanding their businesses considerably.

Inflation figures as per wholesale price index were still at a high at 12.40% for the week ended August 16. The real inflation is, however, hovering at 8.4% if the prices of all goods and services such as construction, hotels and financial services are considered. Nonetheless considering the 5.9 % inflation for the corresponding period last fiscal it remains a cause of concern for the government.

Market regulator SEBI is making headlines once more by implementing a new payment system for public issues called Applications Supported by Blocked Amount (ASBA) wherein retail investors are exempted from paying advance fees, letting the amount be retained in bank accounts till allotment is completed. This is done to ensure that the investors’ money is not blocked unless the shares are actually allotted. However considering the number of intermediaries involved in the entire process such as investors, exchanges, merchant bankers, underwriters to the issue, registrar and transfer agents it is bound to take some time for the entire mechanism to be operational.

In the aviation sector a welcome relief was experienced by airline companies with the 16% drop in ATF prices by public sector oil marketing companies. Even though it is by far the biggest cut in fuel prices of Rs 11,784 per kilolitre, airline companies are not looking at slashing their rates as they would want to exploit the upcoming peak season .It would make sense for them to wait till a clear trend of the movement in jet fuel prices emerges before lowering their rates. In addition, the fuel cut serves as an opportunity to recover heavy losses incurred during the lean season.

Overall the events this week are critical in terms of long term trickle effect .If the Nano plant is to be moved from Singur it would have far reaching implications on not only the bottom lines of the Tatas but also have serious repercussions on future industrial development of West Bengal. Clearance of the Companies Bill and the policy changes introduced by SEBI to streamline processes are greeted with optimism but tangible benefits will arise only upon effective implementation. In conclusion, a wait and watch approach will now be of relevance and the eyes of the nation will be focused on how these issues ultimately play out.

Private Equity Demystified

Continuing with the build up of the events leading to the Big Bang, i.e. the PE Symposium 2008 on the 20th of september, we have this post which answers everyting about PE that you ever wanted to know.

Private Equity....what is it??

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.

Private equity first emerged in the early 1980s, with Kohlberg, Kravis and Roberts (KKR) opening the first, and still among the largest LBO (Leveraged Buy Out) firms. The logic for LBO firms, at least initially, was this: Publicly traded companies are forced to focus on extremely short-term (often quarterly or monthly) results, thus making decisions which may not be in line with their long-term goals. Going 'private' or delisting from the exchanges allows them to focus on these goals. Leveraging, that is, taking debt to buyback these shares as well as spending on longer-term expansion, etc allowed managers to run their companies the way they wanted to. Moreover, the LBO firms were often run by investment bankers and consultants who contributed significant financial and industry expertise. Over time, however, the deals also began to be 'hostile', that is, the LBO managers perceived value in firms which they felt were mismanaged, so they would buy them out, restructure them, and then sell them off once more.

The other side of private equity investment comes from the world of venture capital, where small companies that need to grow but are cash-strapped and too small to list on exchanges approach (or are approached by) VC firms to take a stake in the company, as well as hand-hold them onto a growth path.

India and PE

In India, private equity is reasonably young, dating back to the mid-1990s. The environment heated up in the end of the ‘90s with the IT boom, with companies investing (and getting their fingers burnt) with their investments. In recent years, there has been a resurgence of these firms, with India’s stock markets booming and sectors like the life sciences, infrastructure and most recently, real estate being growth stories for the future. Global firms such as Warburg Pincus, Blackstone and the Carlyle Group have a presence in India while Indian players like ICICI Venture and ChrysCapital also have a large presence.

India’s private equity sector is moving to the big league. Fund sizes have increased dramatically from US $0 to US $25 million just a few years ago, to between US $400 million and US $ billion today. The minimum deals now start at around US $25 million, eclipsing the average deal size of US $8 million in 2002. With the strong global interest in the Indian market continuing, the challenge is no longer about raising private equity funds, but how to extract value from
the portfolio investments, turning the focus from financial capital to human capital.

Where does the Moolah come from??

Essentially, PE funds raise money from high net worth individuals, financial institutions, etc. for a period of seven-ten years and then invest in opportunities as and when they arise, either in early-stage, maturing or even public companies. The work involves of course, valuing the companies that approach you and deciding how much of the company your stake is actually worth, what the company’s growth prospects are, etc. Structuring the transactions for tax-efficiency and industry-specific reasons is also part of the job. Post-stake taking, day-to-day monitoring and growth plans are monitored by the fund, with a senior director taking a seat on the company’s board. Since the target is also to exit the investment in a few years and return money to investors, the deal teams also constantly monitor the capital markets for suitable times to do an Initial Public Offering or find a strategic investor to sell to.

Whats in it for You..

Outside of entrepreneurship, private equity arguably offers the best shot you’ll get at ‘being the boss’ yourself, and not just being just an employee. Since the money is, in some sense, your own, the attachment you would have with your investments is much greater than in most jobs. Additionally, the nature of work offers an unparalleled opportunity to understand a variety of industries and also get to know many of the movers and shakers in the corporate world, investment banking, etc.

Monetarily, private equity is possibly the most highly-paid post-MBA job you can hope to get. The biggest incentive in this industry is the concept of carried interest, which means that the firm keeps a portion (typically 20 pc) of the profits made for its investor, which is then distributed to employees.

What they want ??

The skill set necessary for a PE job includes significant financial expertise, an intuitive understanding of capital markets, but most importantly, an eye to capture the right businesses and entrepreneurs at the right time.

Some good websites on this are:

www.vccircle.com
www.indiape.com

I am Still Bullish.......

Useful Links

Starting off in this category let me give you a list of links which may prove useful to you.

Daily News and Articles
Business Standard: www.businessstandard.com
Economic Times: www.economictimes.com
HT Mint: www.livemint.com

Financial Institutions
Important and relevant data can be sourced from these
IMF:www.imf.org
WTO:www.wto.org
SEBI:www.sebi.gov.in

Stock Markets and Personal Finance Section
www.investopedia.com
www.valueresearchonline.com
www.indiainfoline.com
www.personalfn.com

FinSoc Activities - 2007-08

Apart from the big bang that was IBC, Finance society did a lot of workshops and competitions during the last one year. Here is a snapshot of the same.

Workshops

Investment Valuations

The workshop was conducted by Mr. Vinay Chauhan, Investment Manager, Avigo Capital Partners

and covered various topics such as Financial Statements, FCF Revenue Projections, Modelling Cash Flows, and Multiple based valuation methodologies.

Fundamental and Technical Analysis

A day long workshop on Fundamental and Technical Analysis conducted by Mr. Arun Kejriwal, Director-KRIS Securities.

Derivatives - Dun & Bradstreet

A two days workshop convened on the topic of derivatives in the form of futures, forwards, swaps and options

Competitions

Citi Bourses Game

The simulation Game on forex dealings and treasury had cash prizes worth Rs 50,000. The event was preceeded by a small concept session on Forex Trading by Mr. Rahul Deora , Vice President , FICC , Citi. The teams acted as banks and the moderator as the ECB.

Religare Prometheus

This was a National level paper presentation competition which received over 75 applications. The event judged faculty and saw the team from IIM-L emerge winners followed by the team from FMS

Real Estate Valuation Case Study

National level ‘Real Estate Valuation Case-Study’ competition was conducted in association with HDIL – Housing Development and Infrastructure Ltd. It was the first ever ‘Valuation’ Case study conducted by FMS. We had prestigious judges from the industry like Mr Arun Kejriwal (Director, KRIS ) and Mr. Ashish Jalan, CEO, Concept Communications

Award for Research Excellence in Financial Management

The Event was in collaboration with IFCI. It had teams presenting research papers on “Post Subprime Issues” and “ DFI Model”.

Investment Bankers Conclave

Finance is all about evolution and exchange not just of money but more importantly of ideas and strategies. To facilitate higher learning regarding the dynamic financial services industry which is currently in a transition phase and is witnessing increasing M&A activity, Finance Society, FMS successfully organized ‘Citi Investment Bankers’ Conclave’ in association with Motilal Oswal investment Advisors on 22nd September ’07 at Hotel Radisson.

The day long conclave witnessed tremendous participation both from the corporates and the students. The conclave was divided in to 3 sessions and concluded with an Inter B- school Paper presentation competition sponsored by Religare held on 23rd September. The eminent speakers on the panel were:

Dr Subir Gokarn : Executive Director and Chief economist : CRISIL
Mr Kanwaljit Singh : MD : Helion Venture Partners
Mr Satish Mandhana : Executive vice president : IDFC Private Equity
Mr Akhil Awasthi : Partner : Baring private Equity Partner
Mr. Tashwinder Singh : Head- assets, Commercial Banking, Citibank
Dr. Omkar Goswami : Founder & Chairman : CERG Advisory
Mr Ajay Arora : Partner : Lead Advisory : Ernst & Young
Mr. Frank Hancock : Managing Director : Corporate Finance, ABN Amro
Mr. T. Sivashankar ‐ Director, Special Situations Group (GCIB), Citigroup
Mr Raj Chatterjea : Director, Mergers & Acquisition, Motilal Oswal
The conclave was divided into 3 sessions and got media coverage from Business World, Mint and MBAUniverse.

Session 1: The first session of the day comprised of a workshop by Mr Sumit Bagri and Mr Manoj Fulfagar, Assistant Vice President, ICICI Securities, Investment Banking on ‘Private Equity and Mergers & Acqusitions.’ It covered the entire gamut of activities involved into Equity funding and M&A transactions. The speakers discussed the forms and stages of private equity, approaches the funds follow during the structuring of the deal, reasons to acquire or dispose, Valuation models and finally the post merger integration. The workshop familiarized the students with the intricacies of the Investment Banking domain and was a great learning experience.

Session 2: The 2nd Session of the Conclave witnessed a stimulating panel discussion on ‘Capital Raising in the 21st Century’. The panel comprised of eminent speakers like Mr. Subir Gokarn, Executive Director and Chief Economist, CRISIL; Mr. Kanwaljit Singh – MD, Helion Ventures; Mr. Akhil Awasthi – Senior Partner, Baring Private Equity Partners; Mr Satish Mandhana, Managing Director, Investments IDFC Private Equity and Mr Tashwinder Singh Head Assets, Commercial Banking CitiBank.
The discussion started with the panelists giving their views on diverse topics including the debt market regulatory issues, evolving capital needs for businesses and the need for reengineering. Setting the ground for the discussion, Mr Subir Gokarn highlighted the fact that, "There is a complete change in the economy which is seeing more service oriented businesses booming. These businesses don't have the traditional collaterals like plant or factory but thrive on intellectual capital. This is the new challenge." Drawing focus of the panel to India’s vast fund requirements, Mr Tashwinder Singh, Head Assets, Commercial Banking CitiBank, said, “To meet its growth-plans as per 11th Five Year plan, India needs $875 billion. About $550 billion is required in the area of infrastructure, and $220 billion is required by corporates for their expansion.” Outlining the recent rise of venture funding in India, Mr Kanwaljit Singh, Managing Director, Helion Ventures, said, “Today’s investors look for founders of the companies who have knowledge, technical skills, execution skills and passion to build the business.”
This was followed by a Q&A session with students asking questions relating to the infrastructural finance solutions, the need for change in the regulatory issues, the problem of bond issue in domestic markets and so on. The panel put forward all issues relating to Capital raising for organizations and encouraged students to think for newer and more creative solutions to the long persisting problems.

Session 3: The final Session of the Conclave emphasized on the much debated issue of ‘Cross border M&A’s.’ In this changing arena, highlighted by Indian outbound Investments exceeding the Inbound Investments for the first time in Indian history, every subsequent deal presents a new challenge to the Investment bankers. The panelists, presented their views on issues related to the elements that need to be mapped before an M&A, the creation of shareholder value or the lack of it, managerial due diligence, cultural and Human resource aspects associated with an M&A and related issues.
Speaking on the issue of Cross Border M&As Mr. Omkar Goswami, Founder & Chairman, CERG Advisory said, "There is a massive surge in number of cross-border M&A deals. But research conclusively shows that only 20 per cent of M&A deals add long-term value to the companies. Making M&A work is a big corporate challenge." Mr Frank Hancock, Managing Director, Corporate Finance ABN Amro Bank highlighted the objective behind M&A. According to Frank, “The real objective behind these mergers and acquisitions should be capturing new market, new technology or acquiring intellectual property as in brands or patents.” During his tenure in ABN AMRO, Frank has advised on and/or financed many of India's largest, most complex transactions including advising/financing Tatas on their USD 13 bn acquisition of Corus PLC through Tata Steel, advising GOI on its USD 2.4 bn privatization of New Delhi and Mumbai airports etc.

Frank Hancock, MD, Corporate Finance, ABN AMRO

The conclave witnessed large scale participation from the corporates, faculty, participants from various B schools and the students. The conclave provided the perfect platform for the students to interact with the corporate stalwarts to discuss, debate and argue the various issues related to the Investment banking Industry and was an enriching and an educational experience on the whole. The conclave was a huge success both in terms of the scale of the event and the final value addition for all the participants

Fiesta 2007

The Finance Society did five events as a part of the annual management fest Fiesta.

Avenir

An Innovative portfolio design competition to be held at any B-school. It required participants to design portfolio for characters based upon theie risk preferences. The event generated widespread interest and saw good participation.

Finclusion

A one of a kind event which required participants to device innovative, but yet sustainable, financial products aimed at meeting the needs of the Rural Indian Population.

Genesis

The traditional Paper writing competition from the Finance society, it invited papers on diverse financial topics. The event received over entries from across B schools in India and culminated with a series of presentations from the top teams.

Beat the Street

The Online Stock Trading Game saw participation from 248 Teams from across campuses. The top teams were given trading facilities for the whole week during which they had to maximize their portfolio.

Amnesia

The flagship quiz from the Finance society had enthusiastic participation and a dramatic last round win for the home team.

Your Fin Team

President

Aditi Bhattacharya

A post graduate in commerce, Aditi views life as a continuous learning process. She relishes opportunities to rethink established paradigms and believes in living life to the fullest, both personally and professionally. Enterprising and resourceful, her strengths lie in her ability to adapt and organize as well as undertake initiatives to broaden the realm of activities at FMS. An avid finance student by day, musician by night and wildchild at heart, she loves trekking, travelling, books and movies.

Executive Members

Kusha Goyal

An Electronics and Telecommunication engineer from NSIT Delhi, Kusha is intrigued by newer challenges and opportunities to explore beyond the boundaries of conventional wisdom. An extremely focussed and hard worker, she is thoroughly dedicated to our collective goal of taking FMS to greater and uncharted heights. Apart from being a keen student of finance, she has an avid interest in literature as well.

Ronak Marolia

From the city of Mumbai, Ronak is an Electronics Engineer from D J Sanghvi College of Engineering. He is a person who loves to take new challenges and works with dedication and deliberation. Assertiveness and discipline make him an asset to the team. He strengthens the cohesiveness and synergy of the team. Apart from academics, his interests include painting, gaming, and martial arts

Nirmal Khachane

Nirmal has completed his Computer Engineering from COEP, Pune and has a work experience of 3 years. He is a meticulous planner and has great organization skills. His depth of knowledge and his ability to think outside the box makes him a valuable member of the team. A very versatile personality, his interest areas include stock markets, computer science and travelling.

Finance Society - an Introduction

Finance Society – Trailblazing the finance terrain at FMS
Our Vision at the Finance Society is to educate each and every FMSite about all aspects of modern day finance and financial institutions.

The Philosophy
We at Finance Society believe that finance is all about evolution and exchange not just of money but more importantly of ideas and strategies. The Society combines educational programmes like seminars, guest lectures and workshops with fun events like games and quizzes to build camaraderie among FMS students and the alumni. Our endeavor is to equip students with the financial acumen required to succeed in business by providing them with insights on various aspects of Banking, Insurance, Portfolio Management, Derivatives, Credit Rating and other financial services.

The Mission
The Mission of the Finance Society is to improve students' understanding of financial aspects of management; to help develop practical knowledge and apply it in the markets and to create superior access to career opportunities available in the financial marketplace.

About Us
The Finance Society is a student run group that aspires to endorse Finance as a career opportunity at FMS. It is our endeavour to further the education and interest of the FMSite in the financial domain. We provide an interface between the Industry, the faculty and the students We aim to accomplish our objectives throughOrganizing Guest Lectures and Seminars to supplement classroom teaching for a greater understanding of the concepts, Conducting Online Simulation Games and Workshops to develop practical knowledge, Arranging for live projects for the application of the knowledge, Enhancing Corporate Relations by promoting interaction, dialogue and relations with the corporate community for creating superior access to career opportunities, Conducting Knowledge Sessions and Mock Interviews
With significant representation at the top banks and other financial institutions, FMS alumni also provide a priceless resource for the current FMS students.

We can be contacted at:
The Finance SocietyFaculty of Management Studies
University of Delhi, North Campus
Delhi-110007
Email: finsoc@fms.edu