Sidbi Venture to launch new Rs 500 cr fund for SMEs

Sidbi Venture Capital Ltd (SVCL) has firmed up plans of launching a new Rs 500 crore venture capital fund to help small and medium scale enterprises develop in the country.

"The fund will be made operational from this months itself," explained Ajay Kumar Kapur, chief executive officer, SVCL. "The SME Growth Fund will be floated in association with other commercial banks. Some banks have come forward to partner with SVCL in raising the seed capital," explained Kapur.

Sources in Sidbi said that SVCL already has a commitment of Rs 200 crore from its partners. Many banks with flush funds have evinced interest in associating with us for setting up the fund.

The fund will be solely used to finance projects undertaken by small and medium enterprises, while Punjab National Bank (PNB) and Bank of India (BoI) have sounded Sidbi to invest Rs 100 crore each in the fund to match the latter's seed capital of Rs 100 crore.

SVCL was started with a Rs 100 crore fund initially to finance ventures in the information technology sector. "The National Fund for Software and IT is in its last leg of investment plans and has nearly been exhausted.

Under the fund we have provided capital to as many as 27 companies in the last few years all of which are doing well," explained Kapur.

This year SVCL has sanctioned funds to four companies and which has exhausted the former IT fund.

"With the new fund we would focus on biotech, food, retailing, engineering, and the auto parts segment to mention a few," he added.

In a parallel development SVCL and Sidbi has roped in a total of six public sector banks to set up an independent credit rating agency for the sector. Banks such as PNB, BoI, Canara Bank, Union Bank, Bank of Baroda, Oriental Bank of Commerce is likely to join Sidbi for the new initiative.