India needs $60-100 billion PE/VC funding by 2013: Study

Posted by on May 7th, 2010 and filed under Business/Economy. You can follow any responses to this entry through the RSS 2.0. You can leave a response or trackback to this entry

New Delhi, May 7 (IANS) India will need around $60-100 billion private equity (PE) and venture capital (VC) funds by 2013 for its infrastructure projects, according to a study released Friday.

The country’s investment needs are estimated to be more than $1.25 trillion over the next three years to support 7-8 percent annual growth.

A KPMG-CII report said PE and VC investments need to be increased three-fold from $10 billion annually to $30 billion.

‘India has a very vibrant Venture Capital/Private Equity (VC/PE) industry with over $32.5 billion invested across more than 1500 VC/PE deals from January 2006 till date. PE funding is expected to provide capital to fund the much needed infrastructure projects to support GDP growth of 7-8 percent per annum in India,’ it said.

The report found that PE-backed companies had performed better than non-PE and listed firms in terms of revenue, profit growth and sales. Besides, they also paid more to their employees.

‘Annual sales of PE-backed companies grew at almost 25 percent, a significantly higher rate than the 16 percent growth rate of non PE-backed companies. Profit-After-Tax (PAT) of PE-backed companies grew at almost 35 percent, a significantly higher rate than the 25 percent growth rate of non PE-backed companies,’ it said.

According to the report, PE/VC investments help fund the growth of those small promising companies which cannot tap equity and debt markets initially.

Over 1,500 companies have collaborated with PE firms in India so far and have excelled in several key sectors like IT/ITES, telecommunication, retail, infrastructure and manufacturing, the report said.

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