Rising rates not to affect small firms

DSP Merrill Lynch Fund Managers Ltd is confident with its new closed-ended equity growth fund - Micro Cap Fund - as it expects the small cap companies will not be affected by the hike in the interest rates.

Apoorva Shah, Senior Vice President and Fund Manager, DSP Merrill Lynch, said, "Rising interest rate will not affect the small companies as there are various other avenues to raise funds, including ECB amongst others."

Moreover, Shah said, the rise in interest rates are not the only deciding factor in the growth of the small sized companies.

The rise in the lending rate will have a uniform impact on the entire economy. So it is not the only factor that will determine the growth of the small-sized companies. The large-sized companies are turning out to be global players as well as growing strong in the domestic market. The small companies' business will grow along with the growth of large-sized companies.

DSP Merrill Lynch is looking at other factors amongst the small-sized companies like management and efficiency to run the company. The company is eyeing 40 to 45 small sized companies listed on the stock market. However, the company has shortlisted 300 small size companies out of the 1,400 companies which are listed.

According to DSP Merrill Lynch, companies in this segment have seen increasing access to capital from private equity funds as well as banks. There has been an increase in investor appetite for stocks in this segment especially from FIIs and institutional investors.

DSP Merrill Lynch through its Micro Cap Fund aims to raise approximately Rs 500 crore.