Sidbi plans to launch private equity fund

The Rs 100-cr fund will invest in small-, mid-sized firms.

The Small Industries Development Bank of India (Sidbi), the state-run lender to the small-scale sector, is planning to launch a Rs100-crore private equity fund, which will invest in small- and medium-sized companies. A Sidbi official said they would be essentially looking at companies going in for public offers.

"The fund will be a proprietary fund raised out of our balance sheet only. Last year, the board of the bank approved the plan, and within next two months, the fund will be operational,"said a Sidbi official.

Sidbi's plan comes at a time when several others, including ICICI Ventures, Kotak Mahindra, Motilal Oswal and foreign financial majors Citigroup, Morgan Stanley and Merrill Lynch, are active in the Indian private equity market. Sidbi officials said they could carve a niche for Sidbi in the micro-finance sector.

Recently, IDBI Capital Services, the broking and financial services subsidiary of IDBI, launched its Rs 50-crore private equity fund, aimed at funding mid-sized companies.

It is also a proprietary fund of IDBI. Meanwhile, sources said IDBI, Sidbi, ICICI Ventures and IFCI together are planning to invest in GSPC Gas.

GSPC Gas is an arm of Gujarat State Petroleum Corporation. An IDBI official confirmed the report, but declined to comment on the size of the amount and the equity stake.

A recent study by Bain & Co, a global consultancy firm, said the private equity market in India was set to more than triple to $7 billion by 2010.

"World class differential capabilities in manufacturing and services combined with expanding domestic demand will fuel private equity growth over next 5 years," the study said.