Start Ups with Innovative and High technology businesses need Capital to grow and Venture Funds are recognized globally as the most suitable form of providing risk capital to innovative and high technology businesses.
In order to meet the Venture Capital needs of SME units and enable them to Achieve Rapid Growth by taking advantage of opportunities in the emerging sectors, SIDBI Venture Capital Ltd. has set up SME GROWTH FUND.
SME GROWTH FUND is registered with Securities and Exchange Board of India (SEBI) as a Venture Capital Fund and has been structured as a unit scheme to make primarily equity or equity-related investments in the growth oriented businesses having significant business activity in India. The Fund seeks to achieve attractive risk-adjusted returns for its contributors through long-term capital appreciation. The fund has a targeted corpus of Rs.500 crore with a life of 8 years.
TARGET GROUP
The focus of SME GROWTH FUND’s is to invest in unlisted entities in the small and medium enterprises in manufacturing as well as services sector as also businesses providing infrastructure or other support to SMEs. The Fund may also invest very selectively in listed entities, to take advantage of attractive opportunities in growing companies.
The Fund will typically invest in companies at early stage as well as in second round financing for those with a track record of proven technology or business model and opportunities for growth and earnings.
SME GROWTH FUND will focus at wide range of growth sectors, such as life sciences, retailing, light engineering, food processing, information technology, infrastructure related services, healthcare, logistics and distribution, etc.
INVESTMENT PATTERN
Equity or Equity-linked capital investment are primarily mode of financial assistance by SME GROWTH FUND. It shall also endeavor to provide mentoring support and other value addition to enable the funded companies to achieve rapid growth and achieve / maintain their competitive edge in domestic and international markets.
The Fund will seek a strategic stake in the funded companies with board representation and other rights as venture capital investor.
INVESTMENT CRITERIA
SME GROWTH FUND is looking for investment in projects offering potential for attractive growth and earnings. Key criteria for project selection are –
— Strong and committed core team: The Fund will look for businesses managed by a team with a demonstrated performance track record, commitment and energy.
— Growth potential: The Fund will like to invest in promising businesses having potential for sustainable high growth.
— Long-term competitive advantage: The Fund will prefer to invest in innovative business operations with a sustainable competitive advantage.
— Viable business plan: The venture should have a viable business plan which offers above average profitability leading to attractive return on investment.
— A Clear exit plan: The Fund, being of limited life, will seek to invest in ventures offering a strategy for clear exit within a reasonable time period. The exit could be by way of IPO, offer for sale, merger and acquisition or sale to a strategic or a financial investor.
— The fund is presently in the divestment stage.
