Investment Valuation in India

In the largest e-commerce deal in India so far, homegrown e-retailer and marketplace owner Flipkart has acquired online fashion retailer Myntra in an estimated Rs 2,000 crore deal.  Flipkart has been good at replicating established models and strategies. Flipkart founders - Bansals- were ex-Amazon employees and started Flipkart selling books online - just what Amazon did in its early days. Even in case of acquisition of Myntra, the strategy is the same as that of why Facebook acquired WhatsApp - kill competition. Fashion & Apparel has the largest potential in the e-commerce space and India is set to become the largest E-commerce market in the world - in terms of volume. As the urban (metro, Tier I and Tier II) population is getting more awareness and is getting exposed to E-commerce, India is slowly increasing its online spend. Apparel has been slow (it all began with books, to gift items to electronics - and now apparel) but has huge potential. Myntra has been a forerunner...

Sec 42 of the Companies Act 2013 talks about PRIVATE PLACEMENT and SHARE APPLICATION AND ALLOTMENT. The section will have huge impact on a number of private companies who have been exploiting the share applications and transfers. Private Placement offer for maximum 200 persons in a financial year; Special resolution to be passed at a Members General Meeting for each offer; Issue Price justification required in Explanatory Statement to the Notice of Meeting; Minimum share application from each person to be Rs.20,000/- face value of shares; Fresh offer not allowed until allotment of previous offer completed; Share application Money cannot be received in cash; Separate bank account should be operated for receipt of share application money; Share Application money cannot be utilized for any purpose other than allotment; Allotment to be made within 60 days of receipt of share application money, or else to be refunded within 15 days of expiry of 60 days; In case of delay in r...

Private equity players say they are all weather players. They admittedly look for growth stories and value multiplication of investments. Most PE investors say their investments are not valuation-specific, and they do not mind paying higher valuations if there is growth potential. But the actual PE investment trend, over time, throws up an opposite picture. An analysis of PE investments made in India between 1998 and 2008 shows that PE investors remained silent during the bear period barring some one-off deals, and they aggressively invested during the bull-run even at higher valuations. To successfully execute a PE investment, a fund manager needs to identify and access an investment opportunity, finance the company through a properly structured instrument, create new shareholder value and realise it via an advantageously structured and executed ‘exit’ transaction. Superior investment return is not the only reason why more and more investors are turning to PE. A sophisticated investor...