TOKYO (Reuters) – Indian companies backed by private equity (PE) funds have recorded faster sales growth and than rivals who do not have such financial partners, according to a study released on Tuesday.
Employees' wages at PE-funded Indian companies also outpaced their peer group.
“Private equity (and) venture capital investment, when chosen and leveraged well, can help Indian companies … in several ways that add significant value to the Indian economy,” said Arun Natarajan, founder and chief executive of research firm Venture Intelligence, which compiled the study.
The study comes at a time when PE firms are investing record amounts in India. In 2006 they invested $7.5 billion in 299 deals in India, three times the amount of 2005.
Private equity firms are also scrambling to participate in the sale of India's fourth-largest telecoms carrier, Hutchison Essar, which has been valued by brokerages at up to $20 billion.
Sales at publicly listed PE-backed companies grew by 22.9 percent over a five-year period to 2005, compared with 10 percent at listed firms which do not have PE backing and 15.8 percent at Nifty Index companies.
Wages at publicly listed PE-backed companies grew by 32 percent over the five-year period, compared with 6 percent at non PE-backed listed firms and 16 percent at Nifty Index companies.
More than 60 percent of top executives at PE-backed companies surveyed said the number of employees at their firms rose after PE investment, the survey said.
That flies in the face of some popular perceptions of private equity funds, which have been labelled locusts by a German politician and vulture funds in the Japanese press.
Across Asia, M&A bankers are hoping for a strong 2007 but fear protectionism could continue to block some deals.