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$2 b VC funds, Rs 10,000 cr debt fund to boost SMEs
By siliconindia
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Friday, 16 April 2004, 19:30 IST
NEW DELHI: Industry experts have observed that foreign venture capital (VC) worth $1.5-2.0 billion and Rs 10,000 crore from Sidbi's SSI Fund will bolster small companies in the country this year.
"About $1.5-2.0 billion are expected to be invested by private equity funds this year. Many new players are entering the country," Ajay Relan, Citigroup Venture Capital India head said, at the Nasscom-SME forum on Thursday.
Citigroup's venture fund alone plans to invest about $100-200 million in start-ups. The group has so far invested $200 million so far in equity of small companies, he said.
Other funds like ChrysCapital are also eyeing India as a potential investment destination.
In 2003, the country witnessed a slump in venture funding at $530 million compared to $1.1 billion in 2002.
Apart from foreign equity funds, Small Industries Development Bank of India (SIDBI) has started lending money to small companies from the newly set up SSI Fund.
"We are looking at services related to infrastructure telecom along with biotech, pharma and various outsourcing services for the funding," a Sidbi official said.
The Rs 10,000-crore SSI fund would be used to restructure debt of small and medium-sized companies, the official added.
Although venture capitalists are optimistic of the small companies in India, industry experts said that there has been no major gain to them due to a variety of reasons.
Moreover, there has been no major mergers and acqusitions in the IT sector, which might have given the VC funds opportunities to gain from their initial investments, he said.