With an immense thirst for growth capital emerging from the rapidly growing small and medium enterprises (SME) sector, private equity (PE) players are now studying opportunities to invest in the same.
Says Kapil Kaul, associate vice-president, Duke Equity Partners, “SMEs in India are getting neglected. They lack business management skills, infrastructure and presentation skills. Hence, there is a need to develop this sector.”
According to analysts, SMEs lack access to private equity and venture capital and have a very limited access to secondary market instruments. Also, a small segment of the small and medium enterprises have inadequate access to finance due to lack of financial information and non-formal business practices.
Pune-based Duke Private Equity will soon be setting up an incubation centre for the SMEs called ‘SME spring board’. The company will tie up with the SMEs, which have a turnover of Rs 5 crore to Rs 80 crore, in the automotive manufacturing and engineering sectors. According to Vishal Tulsyan, head, private equity business, Motilal Oswal Venture Capital Advisors, the SME sector will soon be an attractive business opportunity for PE investors. “We have raised a $100 million fund, which will be invested only in small and medium enterprises which are valued at Rs 50 crore to Rs 400 crore. The investment is spread over a period of 18 to 36 months. We are looking at making 15 to 20 investments in the SME sector over this period,” Vishal revealed. “There is a huge unserviced demand for private capital amongst SMEs to support the emergence of new sectors and the growth of existing sectors. We hope to fill this gap,” he added.
Source : Financial Express