GVFL plans $1 bn fund for Japanese ventures

Company hopes to achieve financial closure for its largest fund by 2016

Ahmedabad-based Gujarat Venture Finance Limited (GVFL) is on an ambitious expansion mode. The company is for the first time planning a massive $ 1 billion (Rs  6,000 crore roughly) fund meant exclusively for Japanese ventures in Gujarat.

Once financially closed, this will be the largest fund ever attempted by GVFL for which the company is in talks with Japanese and other South East Asian investors to invest through the fund.

Till now, the largest fund attempted by GVFL is around Rs  500 crore through the Golden Gujarat Growth Fund - 1, even as it plans to expand the fund to Rs  1000 crore.

“In the next one or two years, more than 100 Japanese entrepreneurs will be coming to Gujarat to set up businesses. In recent times, Japan has reiterated its interest of investing in India, especially in Gujarat. There will be cluster based specialised industries who would also need infrastructure built around their food and culture. We will have to tap them through a dedicated fund,” said Harish Pattnaik, managing director of GVFL.

The company is already witnessing commitments from investors in Hong Kong and Singapore regions for its Rs  1000 crore Golden Gujarat Growth Fund (GGGF). With a size of $ 1 billion (Rs  6000 crore), the fund will also up the ante of investment per investee firm.

“As against the conventional limit of Rs  25-50 crore, this fund will see ticket size of around Rs  200-500 crore per venture. The fund will act as a private equity and growth capital. Lot of Japanese firms have shown interest of investing in Gujarat such as Toshiba and Mitsubishi. Moreover, there are few Japanese agencies such as JICA and JETRO are active in the state already and can be partnered with,” Pattnaik added.

While the Japanese fund is on drawing board, GVFL will begin the process of registering its in SEBI after the elections. However, another small and medium enterprises (SMEs) dedicated fund is being planned by GVFL which it will register with SEBI soon.

“We are planning an SME specific fund which we will register with SEBI soon. To be called ‘Value Multiplier Fund’, we will raise around Rs  500 crore and invest an average Rs  15 crore in SME ventures. We hope to garner a 20-25 per cent internal rate of return (IRR) from the SME fund,” Pattnaik added.

Meanwhile, GVFL hopes to achieve financial closure for the Japanese fund by 2016.