Private Equity FAQs

Classic LBO (where a sponsor takes leverage on the operating company to fund its acquisition) is not permitted by regulation in India. The leverage in this type of transaction is referred to as “onshore leverage” as the investee company carries the leverage on its balance sheet. The objective of an LBO is to reduce the equity check in a large transaction. However, another way to meet this objective is to create an SPV outside India, fund it with the desired equity and assume the leverage on its balance sheet. This SPV can then be used to fund an acquisition in India – this is referred as offshore leverage (since the debt sits in an offshore HoldCo SPV)

Many funds do not require a classic onshore leverage model since it is not possible to execute the same in India. However, most funds would generally require you to model a HoldCo leverage and in some cases a classic LBO model could also be specified.

Track roles in PE are more competitive than some other finance roles due to lean teams and extremely low churn given the long-term nature of an investment cycle (from sourcing to exit). The competition pool for recruitment at entry level track roles is from the following pool of candidates:

• IB Analyst and Associates at top firms (Post-MBA)
• Consultants at strategy firms (Post-MBA)
• Current Analyst / Associates at other buy side funds who are on Track roles
• MBAs with Pre-MBA PE experience in India

Since each of the above pools are mature in size, the number of qualified applicants are very high as compared to the demand for new roles