Private Equity India

MUMBAI: Private Equity- and Venture Capital-backed companies are growing significantly faster compared to their non Private Equity-backed peers as well as market indices like the Nifty and CNX Midcap, according to a study released by Venture Intelligence, a provider of information and networking services to the Private Equity and Venture Capital ecosystem in India.

The Private Equity Impact report, showcasing the findings of a first-of-its-kind study measuring the Economic Impact of Private Equity and Venture Capital on the Indian economy, also shows that wages at PE/VC-backed companies are growing at a significantly higher rate compared to their peers who are not PE-backed.

Sales at publicly-listed PE-backed companies grew 22.9 per cent during 2000 and 2005, compared to 10 per cent at non PE-backed listed firms and 15.8 per cent at Nifty Index companies.

Wages at publicly-listed PE-backed companies grew 32 per cent between 2000 and 2005, compared to six per cent at non PE-backed listed firms and 16 per cent at Nifty Index companies.

The Venture Intelligence study conducted with advice and guidance from Prof. Amit Bubna of the Indian School of Business, Hyderabad - measures the economic impact of Private Equity and Venture Capital on the Indian economy using qualitative and quantitative methods.

The study provides quantitative comparison of PE- and VC-backed companies against their non PE-backed peers and relevant market indices, in terms of key economic parameters like Sales, Profitability, Exports, Wages, and Research & Development. It also includes a first-ever qualitative survey of founders of PE/VC-backed private companies, and case studies featuring PE/VC-backed companies from different sectors.

The survey revealed that about 96 per cent of top executives at PE/VC-backed firms believe that without PE/VC financing, their companies would not have existed or would have developed slower. Also, more than 60 per cent of top executives at PE/VC-backed companies surveyed said that the number of employees at their companies had increased after the PE/VC investment.

PE Impact also provides a snapshot of how PE/VC backed companies dominate the list of top companies in the rapidly growing Business Process Outsourcing (BPO) sector. The report features case studies of successful three PE/VC-backed companies – Spectramind (BPO), Arch Pharmalabs (Pharmaceuticals) and Bharti-Airtel (Telecom Services) – showing how these organizations benefited from PE/VC investments and the lessons learnt in the process.

“The common thread that emerges from the study is that Private Equity / Venture Capital investment, when chosen and leveraged well, can help Indian companies innovate, create new businesses and accelerate growth in several ways that add significant value to the Indian Economy,” said Arun Natarajan, founder and chief executive officer of Venture Intelligence.

From © CyberMedia News