There is a subtle difference between investors owning shares of a company, where their ownership exposure is limited, and a buyout, which refers to investors owning the majority of the stakes. Since you own part of the shares, your control of the company is restricted as an investor. Contrarily, in a buyout, the majority of the shares, approximately more than 50%, allows you to participate in the company’s decision-making. Therefore, examining India’s mid-market buyout boom suggests that HNIs are acquiring the majority of stakes in medium-sized companies to gain control and access.
Private Equity funds play an essential role here. They are not publicly traded stocks and are available to High-net-worth individuals (HNIs) and institutional investors. In these private equity (PE) funds, HNIs invest, funds conduct buyouts, and finally, investors receive returns, without directly managing the company. However, PEs funds observe the mid-sized companies’ compatibility and stability. Here are the excerpts of it.