PE-backed cos growing faster than peers

BANGALORE: Private Equity and Venture Capital-backed companies are growing significantly faster compared to their non Private Equity-backed peers as well as market indices like the Nifty and CNX Midcap, according to a study released on Wednesday by Venture Intelligence, a research service focused on PE and VC.

Showcasing findings of a first-of-its-kind study measuring the ���Economic Impact of PE and VC on the Indian economy���, the Private Equity Impact Report also shows that wages at PE/VC-backed companies are growing at a significantly higher rate compared to their peers who are not PE-backed.

Sales at publicly-listed PE-backed companies grew at 22.9% over the five year period between 2000 and 2005, compared to 10% at non PE-backed listed firms and 15.8% at Nifty Index companies. Salaries at publicly-listed PE-backed companies grew at 32% over the five year period between 2000 and 2005, compared to 6% at non PE-backed listed firms and 16% at Nifty Index companies.

According to the Study, about 96% of top executives at PE/VC-backed firms believe that without PE/VC financing, their companies would not have existed or would have developed slower. Also, more than 60% of top executives at PE/VC-backed companies surveyed said that the number of employees at their companies had increased after the PE/VC investment. PE Impact also provides a snapshot of how PE/VC backed companies dominate the list of top companies in the Business Process Outsourcing (BPO) sector.

���The common thread that emerges from the study is that Private Equity / Venture Capital investment, when chosen and leveraged well, can help Indian companies innovate, create new businesses and accelerate growth in several ways that add significant value to the Indian economy,��� said Arun Natarajan, CEO, Venture Intelligence.