PE flows to small and medium units fall 3%


The information technology and IT/ITeS sector continued to attract investors, and industry experts attribute this to the IT/ITeS sector’s ability to innovate, which other sectors lack

Private equity (PE) investors’ interest in the country’s micro, small and medium enterprises (MSME) sector gained momentum in 2013 in terms of the number of deals reported, which increased by 26 per cent. However, the total value of deals (in terms of size) dropped by around three per cent.

The information technology and IT and IT enabled Services (IT/ITeS) sector continued to attract investors, and industry experts attribute this to the IT/ITeS sector‘s ability to innovate, which other sectors lack.

According to data compiled by Venture Intelligence, an organisation that tracks PE and venture capital activity, in 2013 (January-December), the number of deals was 222, valued at $1,254 million, compared to 176 deals in 2012, valued at $1,296 million. In the last five years, 2013 reported the highest number of deals. The data is for companies with annual revenues of up to Rs 100 crore. (FUNDING SHORTFALL)

Avinash Gupta, senior director and leader, financial advisory, Deloitte in India, attributed the drop in total deal value to the slowdown in capital deployment by companies: “Lots of Indian PEs provide funds for growth capital. Last year, since the economy did not grow, capital deployment by companies was less. Besides, average deal size was also less.”

He said the same trend would continue in 2014, again reflecting overall economic growth. Since the IT/ITeS sector is global in nature and not impacted by the domestic economy, it continues to attract a large chunk of investments, he said.

 

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SOURCE: http://www.business-standard.com/

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Categorised in: IT & ITES, Manufacturing

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