“We are delighted to further strengthen our connection with ADIA by virtue of their continuous support as an investor in Reliance Retail Ventures Limited. Their extensive expertise gained over the course of several decades of creating value throughout the globe will be of great assistance to us as we work to put our vision into action and propel the retail industry in India forward toward transformation. Isha Ambani, executive director of Reliance Retail Ventures Limited, stated that the investment made by ADIA in RRVL is a further proof to their conviction in the Indian economy as well as our business fundamentals, strategy, and capabilities of execution.

In response to a question about the transaction, Hamad Shahwan Aldhaheri, executive director of the private equities department at ADIA, stated that the investment is in line with ADIA’s overall strategy. “Reliance Retail has demonstrated strong growth and adaptability in a market that is evolving at a pace that is without precedent.” This investment is in line with our overall strategy, which entails providing support to our portfolio firms while they work to transform the end markets in which they operate. “We are pleased to partner with the Reliance Group and increase our exposure to India’s dynamic and rapidly expanding consumer sector,” Aldaheri remarked.

ALSO READ : Tesla increases competition with worldwide pricing drops

The post Investing ₹4,966.80 cr in Reliance Retail Ventures Limited appeared first on Republic Aeon.

PharmEasy also seems to be a mystery. In October 2021, after spending Rs 4,500 crores to acquire the “Thyrocare” diagnostic chain, the company obtained funding at a valuation of $5.6 billion. The share price of PharmEasy quickly increased from Rs 90 to Rs 135 on the private market as news about the company spread. After that, however, PharmEasy ran into trouble and was unable to successfully raise its subsequent round of funding. The Thyrocare transaction was heavily financed by debt, and now that loan must be repaid. There was no way around the higher cost of capital and the inability to go public. At a valuation 90% lower than its last deal, the company is negotiating a rights issue to raise Rs 2,400 crore. 

All of these actions are indicative of FOMO. As investors, we’re always looking to capitalise on the newest investment trend for fear of missing out. Fear, though, might cause us to act rashly and make poor investment decisions.

What can one learn from these examples

Never mimic Institutional Investors:

Private equity (PE) firms and venture capital (VC) funds are very distinct in their investment horizons and risk appetites. They are more obedient to “Power Law” since they diversify their investments. In addition, VC Funds typically benefit from favourable deal terms. Liquidation Preference & Anti Dilution Rights are commonly used by VCs. PharmEasy’s Anti-Dilution rights guarantee that investors who contributed during the transaction that resulted in a $5.6 billion valuation will get no less than an equal number of new shares should the company subsequently raise capital at a lower valuation. The venture capitalists will receive 10 times as many shares in a round that is conducted at a 90% lower valuation. High net worth individuals who purchased the stock on the open market are not covered.

Don’t Catch A Falling Knife:

Intelligent investors know that it is better to average up than average down. If you initially purchased PharmEasy shares at Rs 100/Share, you may consider your average has come to Rs 75/Share and it would be sensible to acquire more at the current price of Rs 50/Share. However, you’ve lost even more money now that the price is so much lower. It’s a waste of good money to invest in terrible companies.

Also Read:Renew Energy to get Rs 64000 cr loan from PFC, REC

Be Willing to Wait for a Liquidity Event:

Even for established, profitable businesses, the time it takes to go public could be much longer than expected. Potential causes are limitless. NSE is a fantastic example of a cash-generating corporation that keeps getting delayed from going public because to regulatory concerns, despite the fact that its earnings have doubled in the last few of years. If you’re desperate for cash, the private market is always there for you to sell at a discount.

Having said this, pre-IPO investing has a lot of merit and should be part of the “satellite” allocation of the portfolio, provided:

• The allocation is within your risk framework.
• You are patient enough to hold these investments eternally without touching them for the foreseeable future.
• You have help from your advisors to overcome information asymmetry.

It’s an exciting time to be a risk investor in India, and eventually the market there will catch up with the times and treat modern enterprises as they should be treated. The goal for an investor is to make cautious but well-informed bets over time. 

The post Perils of investing in unlisted shares: PharmEasy, Reliance Retail hurt traders who invested on FOMO appeared first on Republic Aeon.