?The most preferred exit option for SMEs would be through an IPO?

Friday, September 8, 2006

What is the investment philosophy you follow while investing in SMEs?

Our investment objective is to identify high-growth sectors with global competencies, select rapidly growing companies within these sectors having sound management and proven, sustainable and scalable business models. We take up significant minority stakes in these companies so as to have a board seat representation to participate proactively in the value building process of these companies over a period of 3 to 5 years. We also achieve timely and appropriate exit from these companies with significant returns.
What is the reason for restricting your fund investment only to SMEs in India?

The sustained economic growth during the last decade coupled with opening up of global outsourcing opportunities in favour of Indian and booming consumerism in the domestic markets have propelled the SME sector in India. A large number of SMEs have witnessed growth rates in the range of 50-100% every year. Even to sustain these growth rates, these companies need to invest in capital expenditure and set up expansion projects for which there is a significant need for growth capital. Most of the SMEs are set up by professionals with limited personal resources to meet the growth capital requirements. Although debt is available at competitive rates, most of the SMEs tend to operate at high gearing limiting their ability to raise fresh debt. Hence there is an immense thirst for growth capital emanating from the rapidly growing SME sector.

BTS strongly believes that the Indian SME sector would be the main growth driver of the Indian economy and would provide attractive investment opportunities and hence launched its second fund, BTS India Private Equity Fund specifically targeting the funding requirements of the growth oriented medium scale enterprises.

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Source: Financial Express (link opens in a new window)