What share of the company would sbi caps require today

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Question - The CEO of Millennium Dairy Product, a small venture among 10 partners each having 100,000 shares, sought to raise an additional Rs.50 million in a private placement of equity in his early stage dairy product company. The CEO conservatively projected net income of Rs.50 million in year 5, and knew that the comparable companies traded at a price earnings ratio of 20X. She approached SBI caps, a venture capitalist with her proposal to seek funds.

a) What share of the company would SBI caps require today if their required rate of return was 50%?

b) If the company had 1000,000 shares outstanding before the private placement, how many shares should SBI caps purchase?

c) What price per share should she agree to pay if her required return was 50%?

d) What are the pre money and post valuations?

e) What are the Carried interests of the VC and the promoters?

Reference no: EM132591076

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