| Frequently
Asked Questions (FAQs) |
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Details
of PVCL and the Fund - PIVF are given in the website
-http://www.pvcl.org. The prospective companies are
advised to submit their 'Business Plan'
in the format for executive summary given in the website.
After preliminary evaluation of the 'Business Plan'
so submitted, PVCL shall decide on further action.
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'Business
Plan' highlighting the project salient features,
profile of the management team, technology competitiveness,
market potential etc; can be forwarded to PVCL for preliminary
assessment though e.mail. The company is advised to
simultaneously forward a hard copy
of the 'Business Plan' alongwith supporting documents
to enable us to expedite the process for taking an early
decision on a specific proposal. |
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| We
intend to invest from PIVF primarily in unlisted
companies engaged in high end Software/IT,
telecommunication and hi-tech healthcare areas falling
under knowledge based sector with a focus on small scale
sector including Companies those are graduating to medium
sector. The company should have high growth potential
so that it can scale up sufficiently to make an IPO
within 5 years from the date of investment from PIVF.
Investment segments shall mainly include IT enabled
services/Business Process Outsourcing, Internet based
value added products & services, Software development
(Domestic & Exports), Multi-media/content development
and Value added communication services. |
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PIVF/PVCL
are focusing on all stages of investment viz; new ventures-cutting
edge established technology/innovative idea based generating
employment, expansion/up-graduation/diversification,
pre-lPO and turnaround. However, it is imperative that
the Company at the time of investment be unlisted
with its' facilities in place in the
State of Punjab and is in operations
having revenue activities . |
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PIVF
is a regionally focussed IT dedicated Fund and investment
from the Fund shall be only in Companies who have
its' facilities located in the State
of Punjab. |
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Project
|
Focused
concept |
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Location |
To
be set up within the State of Punjab & facilities
be in position before disbursement of investment from
the Fund
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Technology |
Barriers
to entry, proprietary technology & sustainable competitive
advantage
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Management
|
Professionally
qualified management with strong committed team - visionary
& executors with established credentials
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Market |
High
growth potential areas especially addressing emerging
global markets
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Competitiveness |
Long term advantage through high end technologies and
uniqueness and scalability of operations
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| Return
on Investment |
Potential
for above average profitability leading to attractive
returns |
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| Process
of evaluation of a given proposal involves scrutiny
of business plan/executive summary, appraisal/risk-analysis
of the detailed proposal including preliminary due diligence,
visit to existing facilities/operation site, reference
check, feedback from clients etc. All proposals after
evaluation are reviewed by an 'Investment Management
Committee' (IMC) which also involves a presentation
on the proposal by the promoters. Once the investment
is recommended by IMC, the proposal is put up to the
Board of PVCL for final approval. |
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A flow chart in respect of the process is as follows:- |
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Period
of investment to be upto 5 years with option for early
exit, if warrants |
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IPO |
| * |
Buy-back
by the investee company/promoters |
| * |
Strategic
sale-mergers & acquisition |
* |
Single
investment not to generally exceed 10% of the Fund corpus |
* |
Investment
range to be generally between Rs. 2.0 to Rs. 20 million |
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Investments to be generally restricted to 40% of the
equity share capital of a Company or the capital cost of a
project in the event of it being financed entirely through
equity/equity related instruments |
| On
an average it should be possible to complete the full
cycle of processing of a proposal including short listing,
sanction, post-sanction detailed due diligence, execution
& documentation etc. between 6-8 months. However,
it is difficult to specify time frame as it depends
on a numbers of factors including the availability of
information with the promoters and the speed with which
additional information is furnished thereto.
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However, the
'Fund Management Process',
is briefly delineated hereunder :- |
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Deal sourcing and identification |
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Initial
screening to short list proposals |
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Preparation
of 'Investment Memorandum' in-house and/or
by outside independent consultants of repute |
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Recommendation of the proposal by 'IMC' and
its' approval by the Board of PVCL |
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Detailed
due diligence (technical, secretarial, legal,
financial and accountancy) to be carried-out
by panelist consultants |
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Presentation
of due diligence reports prepared by independent
consultants |
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Acceptance
of due diligence report(s) as prepared
by the consultants appointed for the purpose |
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Disbursement
of funds to the investee company - part
or full |
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Project
monitoring and exit planning |
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Further,
a general over-view in respect to time
schedule is also given hereunder
:- |
| Ø |
Four
weeks after receipt of 'Executive Summary'
- No or in principle agreement to process
further a given proposal |
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Two months for detailed appraisal and
placing the 'Investment Memorandum' before
the 'Investment Management Committee' |
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Three
weeks from the date of preparation of a
memorandum, final approval or rejection |
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One
month for execution of documentation
from the date of acceptance of 'Term
Sheet' by the investee company |
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Four weeks for due diligence from the date
of appointment of panelist consultants |
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Three
weeks for disbursement of investment (in
part or full as may be approved by the Board
of PVCL) from the date of acceptance of
the detailed due diligence report(s) as
submitted by the consultants appointed for
the purpose and compliance of terms &
conditions of sacntion by the Company |
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PVCL
acts as a partner in its' investee companies and insists
on the Board seat. The Board seat is primarily to ensure
transparency of operation and facilitating monitoring. |
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Besides,
finance PVCL provides networking and management support
as well with the objective to make the company grow
rapidly. PVCL also assists investee companies to attract
investment from other venture capitalists in subsequent
rounds of financing.
However,
the Fund/PVCL shall not be regarded or categorised
as the Promoter of the Company nor shall the Company
be regarded as a Joint Venture between
the Promoters and the Fund/PVCL and accordingly, the
statutory provisions, if any, relating to promoter's
liability/responsibility shall not be deemed to be
applicable to the Fund/PVCL.
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We
have formulated a set of documentation which
includes term sheet, subscription agreement, undertakings,
affidavits, deed of guarantee, hypothecation agreement,
agreement for pledge of promoters shareholding, special
power of attorney for pledged shares etc; which the
companies/promoters are required to execute before
release of any monies as investment from the Fund.
Besides,
the companies/promoters are required to comply with
various terms & conditions as stipulated in the
‘Term Sheet’ issued by PVCL to
the investee companies after sanction of investment.
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As a general policy, the promoters/companies
are required to give undertakings for buy-back
of shares held by PVCL on behalf of the Fund
(PIVF) within a period of five years from
the date of first disbursement of investment.
Besides,
the promoters are required to pledge shares
from their shareholding atleast equivalent
to the amount of investment from the Fund
for due performance of buy-back undertakings
as also personal guarantee thereof.
First
charge on the assets (present & future)
of the company by way of mortgage/hypothecation
is also taken as security.
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