subject: Indian Smes Wooed By Pe Investors [print this page] Private equity (PE) investments have given a fillip to the Indian SMEs; according to experts, 70% of the PE investments made in India last year went to the SME sector.
According to a World Bank report, accessibility of credit is the most common hurdle faced by the SMEs in India. Owing to the global financial crisis and the heightened risks associated with non-performing assets, banks have become wary of lending to the SMEs.
In this context, S Arif, proprietor of Star Enterprises, a mid-sized manufacturer of leather hand gloves in India says, The financial constraints have severely affected the SMEs as they are finding it difficult to invest in capital goods and adopt eco-friendly technologies. Therefore, investments made by PE firms have come at a critical juncture, which has provided a much needed relief to the SMEs in India.
PE investments act as a breather
ICICI Venture, UTI Ventures and Chrys Capital were some of the early entrants that made PE investments in the SME sector. The investments made by these companies encouraged several other PE firms to do the same. The period from January 2008 to July 2009 witnessed some of renowned PE firms such as Kotak, Aureos, BTS India, Peacock, Lighthouse, Venture East and SIDBI investing in India. It is expected that the combined investments made by these PE firms is worth US$192 million. Although, such PE investments will not solve the credit problem of SMEs entirely, it will surely provide some relief.
Dhanur Kaushal, proprietor of Dhanur textiles, a mid-sized textile firm in Chandigarh says, It is not only the money that these PE firms bring in, but also their global presence and wide experience that are tremendously beneficial for the SMEs regarding mergers, acquisitions or joint ventures. PE firms also help in smooth transaction of money as most of them have strong bonds with Investment bankers, consultants and advisors.
by: David Parks
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