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Risk factor dips PE investment in SMEs to 68% in '09
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SME Times News Bureau | 23 Apr, 2010
Shying away from risking their capital in small and medium enterprises (SMEs) in the wake of the economic slowdown, Private equity (PE) investment in the SME sector dipped to USD 580 million in 2009, down about 68 percent year-on-year.
PE investment in the SME sector last calendar year stood at USD 580 million via 81 deals against USD 1,812 million through 187 deals in 2008, a study by industry body ASSOCHAM said.
"Poor returns on investments in the midst of challenging times have forced fund managers to think twice when it comes to putting too much into the (SME) sector," it added.
The global financial meltdown made PE investors wary of the small and medium enterprises (SMEs) as there is a great deal of risk involved when it comes to funding cash-strapped companies, the study noted.
Further, less PE investments made it difficult for these small firms to execute their growth plans, the Assocham study said.
Overall, PE deals in India during 2009 numbered 287 amounting to USD 4.43 billion against 502 in 2008 worth USD 11.9 billion.
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