Rajesh Singla is the founder & CEO of Planify. Planify entered the private equity market at the beginning of 2019 and is now the market leader, with over 250 unlisted companies trading with them and a substantial number of companies partnering with them on valuation and fundraising. Currently, they serve over 10,000+ investors, with plans to grow to about 50,000 in the coming years.
Private equity (PE) which is one of the most favourable investments among all, allows individuals to be a part of something big and be a part of change in the making. It is the ownership or interest in a company that is not listed or traded on a public exchange. Private equity (PE) is a source of investment that comes from individuals (HNWI) and firms that buy holdings in private companies. That being said, private equity is limited only to high net worth individuals or corporations who can devote a large chunk of amount to the company they desire, but the private equity market has revolutionised private equity itself. One such company is Planify, which is a leading private equity market place in India. With this market place, anyone, even small retail investors, can become a part of the company.
As desirable as private equity investment is to investors or to companies in its initial stages, Private equity investment still poses many challenges and the market place has stepped in and not only solved those challenges but also revolutionised how investments were made earlier.
- One of the most serious challenges faced by investors is making an exit from an investment.
For most angle investors or venture capitalists, they tend to find buyers to acquire the stakes in the company, so they can take an exit and get liquidity. With a market place in place, established investors can sell their shares in the market place, and the shares will then become available to retail investors to take part in the company and diversify their portfolios. The companies also benefit from the added advantages of promotion and awareness among customers, while investors get the liquidity they desire.
- Price of the shares.
Investors raise funds on the basis of the valuation of the company, which, when done, is kept with them. With the market place, it’s out in the open and the prices respond to demand and supply of the given stock. This provides the opportunity for investors to gain returns on their investments at a valuation derived from the market.
- ESOP Liquidation
ESOP means Employees’ Stock Option Plan. An ESOP is a plan proposed by the company, where the employees get the option to be a part of the company as its shareholders. An ESOP’s purpose is to encourage employees to contribute their best skills to the company so that not only the employer, but also the employees, benefit from the company’s growth.However, there are times when employees want to liquidate their ESOPs to gain value and avoid the burden of income tax.They have an opportunity to sell their ESOP and benefit from the fair value gains and income tax benefits.
The market place offers companies the platform to raise funds to meet their expansion plans. Funding in the market place is easy and convenient. Start-ups enjoy the most benefit from raising funds through these channels. It raises brand awareness among people and, with vigilance among investors, keeps the management from making bad decisions, which enhances the profitability of the company as well as creates brand value among investors.
- Opportunity to benefit from the IPO
Getting a lot in an IPO is very hard for retail investors to get. Investors who would like to achieve listing gains often prefer to buy these stocks in the market place, which often generates a high return for investors. Stocks are easily available in these market place.
Planify, Unlisted Market, 3A, and CRESENT are market participants that offer such stocks of companies on their platforms. This often includes detailed analysis of companies that are traded in the market place, which has not only disrupted private equity investments but revolutionised private equity investments, making them simple and convenient for investors with high net worth or retail investors.