SIDBI venture capital plans to raise $250 Million third fund

Bangalore: SIDBI Venture Capital (SIDBI VC), a state-owned venture capital firm dedicated to small and medium enterprises, is planning to raise $250 million (Rs 1000 crore) third fund.

Harsh Kaul, who has been recently appointed as CEO of SIDBI says, "Right now I am in the process of launching our third fund at SIDBI Ventures. We are setting up Rs 1,000 crore fund." Kaul succeeds Ajay Kumar Kapur, who has moved back to the parent Small Industries Development Bank of India (SIDBI) at Lucknow.

Parent SIDBI has made an anchor investment of 200 crore. SIDBI VC is in now talks with various banks and financial institutions to raise remaining 800 crore. Kaul expects to make a first close at Rs 500 Crore in next three months. Fund will be mainly invested in sectors like agro-based sectors, clean technology, IT and the retail sector.
Kaul said, "Over the years we have earned the perception that we are not interested in smaller investments. There are lots of VC funds who are ready to invest Rs 30-60 crore, so we would concentrate more on smaller investments."

Sectors that are mainly on the domestic demand in India are expected to do well. Kaul says, "Sectors like the agro food processing, warehousing, logistics and healthcare are the less recession impacted sectors."

SIDBI VC's first fund of Rs 100 crore was called as the National Venture Fund For Software and IT Industry. In the first fund, parent SIDBI had contributed Rs 50 crore while the ministry of information technology and IDBI had contributed Rs 30 crore and Rs 20 crore each.

Its second fund of Rs 500 crore and a life size of 8 years were called as SME growth fund. Kaul told VCCircle,"The fund life is also coming to an end in September 2012 so we are really not looking at investments where we can't get the exits before 2012."