The Hindu Business Line : ‘PE-route good for SMEs to raise capital ’

Hyderabad, March 19 The private equity (PE) route to raise capital in the present uncertain market conditions will be beneficial for the small and medium enterprises (SMEs), according to Mr Avdhoot Deshpande, Senior Vice-President (Investment Banking), IL&FS Investsmart Securities Ltd.

In his keynote address at a seminar on ‘Raising Capital for Indian Companies’ organised by the Federation of Andhra Pradesh Chambers of Commerce and Industry (FAPCCI) here on Wednesday, Mr Deshpande said PEs could be a ‘good class investors for the SMEs’.

“Generally, the PEs are willing to stay invested for about three-five years in a company. The 13 million-odd SMEs in India should look to them for capital needs,” he said.

On the prevailing capital market conditions, Mr Deshpande said although there had been some instability in the recent past, the fundamentals were strong.

“Though the number of IPOs have not grown significantly between 2001-02 and 2006-07, the average capital raised had increased considerably.” While about Rs 10,000 crore was raised through 20 IPOs in 2002, Rs 40,000 crore was raised in 2006-07 through 45 IPOs, he added.

Mr M. Rammohan Rao, Dean, Indian School of Business (ISB) said raising of capital for not for profit companies under Section 25 or a Foundation/Trust was becoming increasingly difficult. “This is particularly true with not-for-profit educational institutes such as ISB,” he pointed out.

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