Three-fold growth needed in PE/VC funding: KPMG-CII

New Delhi, May 7 (PTI) Private Equity (PE) and Venture Capital (VC) funding in India needs to increase three-fold to $30 billion annually from the current level to shore up funding for small but promising companies, said a KPMG-CII report.

Besides, it said, as the Indian economy expands, the country's investment needs are estimated to be over $1.25 trillion over the next three years. Higher PE/VC funding can contribute to the requirement by funding the growth of small but promising companies that are not able to tap equity and debt markets at the outset.

It said that even in the case of listed companies, 40 per cent have market capitalisation of less than Rs 125 crore, with Sensex at 17,000, and 80 per cent of the Bombay Stock Exchange (BSE) listed companies have revenues of less than Rs 100 crore.

Thus, making a pitch for greater PE/VC paricipation in the country, the report said, "It is estimated that investments from PE and VC needs to be increased three fold, from a trailing level of $10 billion annually, to $30 billion."

It said India has a very vibrant VC/PE industry with $32.5 billion invested across more than 1,500 deals since January 2006, and added that there are over 137 domestic and 135 foreign PE fund managers operating in the country.

The report added, however, that the investment size of the deals was Rs 70 crore over the last three years.