Specialised Venture Capital Fund/Companies in India
In India only very few specialised venture capital fund/companies have been established. Broadly speaking there are two types of venture capital firms. First, established by all India level financial institutions operating at all India level. Second established by various State Governments operating at State level.
All India Level Venture Capital Funds/Companies
The venture capital funds companies operating at all India level are:
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IFCI VENTURE CAPITAL FUND LIMITED-
Industrial Finance Corporation of India (IFCI) was pioneer in establishing venture capital company in India. In 1975, it established Risk Capital Foundation (RCF). In 1988, it was converted into Risk Capital and Technology Finance Corporation Limited. Later on its name was changed to IFCI Venture Capital Fund Limited.
It is a subsidiary of Industrial Finance Corporation of India. On 31st March, 2018, IFCI held 160 lacs equity shares of Rs. 10 each of its total paid up capital consisting of 78.5lacs equity shares of Rs. 10 each. It held 76.43 of the paid up capital.
As part of fresh initiatives to make IVCF a leading player in the country’s venture capital/private equity business, it has evolved an action plan envisaging induction of a strategic partner, promotion of new equity/venture capital funds, strengthening the organizational structure, taking up fee based assignments, etc. At present, IVCF is in the process of promoting a new investment fund. IVCF has also prepared a proposal for setting up India Business Partners program, primarily to invest in projects in SME segment and it is being pursued with the Government.
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ICICI VENTURE FUND MANAGEMENT COMPANY LIMITED-
In 1988, the ICICI set up the Technology Development and Infrastructure, Corporation of India (TDIC). Later on its name was changed to ICICI Venture Funds Management Company Limited.
Merger with ICICI Econet Limited: In 2002, ICICI Econet Limited, another wholly owned subsidiary of ICICI was merged with ICICI Venture Funds Management Company Limited. It enabled it to create a one time free reserve of Rs. 47.94 million.
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IDBI VENTURE CAPITAL FUND-
Industrial Development Bank of India (IDBI) set up Venture Capital Fund in 1986. However, it did not make much progress. In December 1993 it established IDBI Capital Market Services Ltd. (IDBI Capital) a wholly owned subsidiary of IDBI. It offered a broad range of financial services.
Business Activities: The business activities of the company include Bond rading, Equity Broking, Venture Capital Funding, Client Asset Management and Depository Services.
IDBI Capital is one of the primary dealers accredited by the Reserve Bank of India to act as a market maker in government securities. The company is an active institutional equity broker having membership of both BSE (Bombay Stock Exchange) and NSE (National Stock Exchange).
Voluntary Agencies & Entrepreneurship Development Programmes
The Bank continued to support established accredited Voluntary Agencies (Vas) in their project to provide self- employment and wage employment in the industrial sector to physically/ socially disadvantaged sections of the society in various parts of the country. During the year, an aggregate amount of Rs. 53.5 lakhs was sanctioned to such agencies. As part of its efforts to promote exchange of views on important policy issues, the Bank has been organizing/sponsoring conferences/ seminars on subjects of topical interest. The Bank also supported 238 Entrepreneurship Development Programmes (EDPs), including 40 programmes for persons with a background in Science & Technology. In order to strengthen infrastructure for entrepreneurship development, an assistance of Rs. 19 lakh was sanctioned during the year to Entrepreneurship Development Institute of India (EDII) for part financing its campus expansion.
The Bank commissioned a reputed consultant, viz. Moores Rowland Consulting Pvt. Ltd. (MRCL) for carrying out an independent study of the TCOs and suggest measures for their revival/ growth.
Falling emphasis on Venture Capital: As a part of its strategy to reposition itself, the IDBI has decided to focus on less risky sectors/clients in sanctioning of fresh credit proposals. The slow-down in sanctions and disbursements of fresh assistance by the Bank partly reflects the consolidation strategy and its approach of being selective in accepting new business. The Bank is making concerted efforts to shift its focus more towards non-project lending and fee based services in with diverse needs of its clients. This is reflected in the larger proportion of non- project lending during 2018-19.
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CANBANK VENTURE CAPITAL FUND LIMITED (CVCFL)-
A wholly owned subsidiary of Canara Bank, CVCFL is the trustee and the Manager of the Canbank Venture Capital Fund (CVCFI), CVCFL is currently managing three funds, viz CVCFL-II and CVCFI-III, with corpus of Rs. 16. 12 crore, Rs. 10.5 crore and Rs. 30 crore respectively.
CVCF-1 the first fund set up in 1989, is currently in divestment mode while CVCF-II and CVCF-11 are operational with their corpus almost tied up for investment in ventures. The company has already paid back fully the interest bearing corpus of World Bank Line of Credit borrowed through Canara Bank under CVCF-I Fund. Till March 31,2018, CVCFL has assisted 61 ventures involving financial assistance to the tune of Rs 139.24 crore. A fourth fund, CVCF-IV, is under consideration with an envisaged corpus of Rs 200 crore.
CVCFL recorded a profit after tax of Rs.752.6 lakhs for the year 2018-19 and declared a dividend of 35%.
Important links
- Opportunity Analysis- Meaning & Types
- Factors Determining Capital Gearing
- Need for Funds & Fixed Capital
- Working Capital- Definition, Factors determining Working Capital
- Equity Shares- Meaning, Merits and Limitations
- Preference Shares- Meaning, Types, Merits and limitations
- Raising funds by issue of Debentures- Merits and Demerits
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