<div><em>A lot of investor money is stuck in companies at this point in time and there is pressure mounting on entrepreneurs to give them an exit option, says <strong>Paramita Chatterjee</strong></em><br><br>Private equity (PE) or venture capital (VC) firms, which invest in start-ups are breathing a sigh of relief with Sebi easing rules for listing on domestic exchanges for start-ups, saying it will provide them the much needed access to exits, which so far has been a cause of concern in the industry.</div><div> </div><div>A lot of investor money is stuck in companies at this point in time and there is pressure mounting on entrepreneurs to give an exit option to investors. So far this calendar year, in the January- June period, as many as 264 deals were sealed worth $6.6 billion, while the number of exits stood at 90 with PE firms encashing $4.5 mn, as per data available with Venture Intelligence.</div><div> </div><div>“Private equity works in tandem with the capital market and Sebi’s decision to ease listing norms for start ups is definitely a move in the right direction that will also facilitate investor exits besides giving promoters fund raising options,” said Bala Deshpande, Senior Managing Director at New Enterprise Associates, a venture capital firm with over $13 billion in committed capital.</div><div> </div><div>“Private equity firms are always on the lookout for startups that will grow very big so with with Sebi’s new listing norms, start-ups are definitely going to evince more investor interest,” said Vikram Hosangady, Partner and Head, Deal Advisory at KPMG<br><br>Under the new norms approved by the market watchdog on Tuesday (23 June), stock exchanges would have a separate institutional trading platform for start-ups to list on the bourses, while the minimum investment requirement would be Rs 10 lakh. Further, the regulator has also brought down the mandatory lock-in period for the promoters and other pre-listing investors to six months from three years to make it easy for those wanting to hit the bourses. Currently, there are over 3,100 start ups operating in the country. </div><div> </div><div>A single PE investment cycle usually lasts 3-5 years after which PE firms normally exit by way of trade sale, public listing, recapitalisation and secondary sale. Trade sale is the most common exit for private equity investments as trade buyers in the same industry are often more likely to realise synergies with the business and are therefore, the most natural buyers of the business. Typically, public listing takes place during positive market conditions as prevailing at present. </div>
