PE funds look for 30-50% return

Private equity (PE) or the venture capital (VC) funds typically look for a 30-50 per cent rate on investment (ROI) in a business to make a decision.

“I do not want to refer to any number because that gets stuck with people’s minds. But it is a big number. In terms of range, we will model our base rate scenario of 30-50 per cent rate of return for as long as we stay invested,” Sandeep Reddy, managing director of Peepul Capital Advisors, said on Thursday.

That drives home the point that this is a very expensive form of investment and an entrepreneur must be aware of this before going for the PE route, according to Reddy and other panelists, who spoke at an investment summit organised by VC Circle here.

 

Also, when it comes to choosing a right target, the profile of the promoter and his hunger to grow business come first and the business model is secondary, the panelists said.

Sunil Kolangara, partner of Ascent Capital, said his firm had now adopted a bottom-up approach for investment opportunities in a variety sectors rather than confining to a few only.

While sectors like domestic consumption, healthcare, and hospitality provided attractive opportunities, infrastructure had almost become difficult to make new investments due to delays in project execution among other factors, the panelists said.