# MODULE 3 — PRIVATE EQUITY INVESTMENT STRATEGIES
**Duration:** 4 minutes
**Example companies and amounts:** Fictional and illustrative
## 0:00–0:15 — Introduction
**Visual:** Show an established factory, a growing business, a startup, a distressed company and a private investment transaction.
**Narration:**
“Private Equity investors don't invest in every business in the same way. Some buy a small stake, some acquire control, and others invest in startups or troubled companies.
Let's understand the main strategies, how ownership works, and where the money goes.”
## 0:15–0:55 — Step 1: How does a PE investor buy ownership?
**Visual:** Display a company valued at ₹10 crore. Show two transactions: new shares issued by the company and existing shares sold by the founder.
**Narration:**
“Imagine Apex Components has an equity value of ₹10 crore.
An investor wants to acquire a 20% stake worth ₹2 crore, assuming the agreed valuation and transaction terms.
There are two ways this could happen.
First, the company issues new shares. The investor pays the company, which can use the money for expansion. The founder's ownership percentage is diluted.
Second, the investor buys existing shares from the founder. The founder receives the money, and the company may receive no new capital.
Now, why buy 10%, 20%, 30% or 100%?
A smaller stake provides partial ownership. A larger stake provides a greater economic interest. A controlling investment gives the investor control under the applicable voting and governance arrangements.
But percentage alone does not determine control. Shareholder agreements, voting rights and board representation matter too.”
**Visual:** `New shares → Company receives cash` versus `Existing shares → Selling shareholder receives cash`
## 0:55–1:35 — Step 2: Buyout and LBO
**Visual:** Show a mature manufacturing business being acquired. Animate equity and debt combining to fund the purchase.
**Narration:**
“First is a buyout. An investor acquires control of an established business.
A common form is an LBO, or Leveraged Buyout, where the acquisition uses a combination of investor equity and borrowed money.
Suppose a company has an enterprise value of ₹100 crore. The buyer finances the acquisition with ₹40 crore of equity and ₹60 crore of debt.
The business generates cash that may help service and repay the debt.
If the business performs well and debt falls, the investor's equity value may increase. But if earnings fall, debt makes the investment riskier.
A buyout is the acquisition strategy. An LBO describes a leveraged financing approach often used to complete that acquisition.”
**On-screen calculation:**
`Equity = ₹40 crore`
`Debt = ₹60 crore`
`Total acquisition financing = ₹100 crore`
## 1:35–2:05 — Step 3: Growth equity and venture capital
**Visual:** Transition from a profitable company expanding into new cities to a startup developing its first product.
**Narration:**
“Next is growth equity.
Imagine a profitable food company needs ₹15 crore to expand into ten new cities. An investor provides capital for an agreed ownership stake, often without acquiring full control.
The money supports expansion.
Now consider venture capital. A startup developing healthcare software raises ₹2 crore to hire developers and acquire its first customers.
Venture investors accept greater uncertainty because the business may have significant growth potential.
The difference is simple: growth equity typically funds expansion in an established business, while venture capital typically backs younger businesses with less-proven products or business models.”
## 2:05–2:35 — Step 4: Distressed investing
**Visual:** Show a factory with overdue debt payments, followed by a restructuring meeting.
**Narration:**
“Distressed investing focuses on financially troubled businesses or their debt.
Imagine SteelWorks owes lenders ₹10 crore but is struggling to make payments. An investor buys a debt claim with a face value of ₹10 crore for ₹6 crore.
The investor hopes to recover more than the purchase price through repayment, restructuring or another appropriate outcome.
But a ₹4 crore difference between face value and purchase price is not guaranteed profit. Recovery depends on legal rights, creditor priority, business value and costs.
The focus here is recovery and restructuring, not simply expansion.”
## 2:35–3:15 — Step 5: Other important PE strategies
**Visual:** Show four simple diagrams, one at a time.
**Narration:**
“Private Equity also includes several other investment approaches.
**Secondaries:** An investor buys an existing investor's stake in a fund or an existing private investment, rather than necessarily funding a brand-new investment.
**Co-investments:** An investor invests alongside a PE fund in a particular company or transaction.
**Fund-of-funds:** A fund invests in other investment funds instead of investing directly in operating companies.
**Continuation funds:** A PE manager establishes a new vehicle to hold one or more existing investments, allowing existing investors to sell or continue, subject to the transaction terms.
These approaches can provide different ways to access investments, manage liquidity or continue holding a business.”
## 3:15–3:45 — Step 6: Compare the strategies
**Visual:** Display a concise comparison table.
**Narration:**
“Let's recap.
A buyout targets control of an established company. An LBO uses debt alongside equity to finance an acquisition.
Growth equity funds expansion. Venture capital backs early-stage businesses. Distressed investing focuses on troubled companies or debt.
Secondaries trade existing interests. Co-investments allow investors to invest alongside a fund. Fund-of-funds invest in other funds, and continuation funds allow selected investments to remain held through a new vehicle.
Each strategy has different risks, financing needs and potential exit routes.”
## 3:45–4:00 — Conclusion and next lesson
**Visual:** Display: `Strategy → Ownership → Financing → Value → Exit`
**Narration:**
“The key lesson is that investment strategy, ownership percentage and financing are different decisions.
A PE investor must understand what they are buying, how the transaction is funded, what rights they receive and how they may realise a return.
Next, we'll learn how LPs, GPs and fund structures organise the money behind these investments.”
**Final screen:**
“Private Equity Strategies — Understand the deal before the accounting.”
*All examples are illustrative. Actual ownership, control, financing and exit terms depend on the transaction documents and applicable law.*
