Delhi Finance Corp. to fund IT cos.

By : |May 4, 2000 0

NEW DELHI: As part of Chief Minister Sheila Dixit’s vision of making Delhi
a cyber state by 2001, the Delhi Financial Corporation has launched a separate
company to fund IT start-ups. The new company called Delhi IT Venture Fund
(DITV) will have a two-tiered structure with the Board of Directors comprising
all contributors to the Fund and a professionally managed Asset Management
Company (AMC) that will be headed by a new CEO.

The new company, which was registered in March, will disburse the Delhi IT
Fund. The Fund has a corpus of Rs 170 crore and will be disbursed in three
stages. AMC will screen the projects in collaboration with IIT Delhi with whom a
tie-up is on the anvil. DITV will have a minimum equity of 30 per cent and a
maximum equity of 70 per cent in the projects and will exit during the IPO.

The contributors to the fund during the first tranche are SIDBI (Rs 10
crore), IDBI (Rs 2.5 crore), Delhi IT Venture Fund (Rs 4.5 crore), and the
Government of Delhi (Rs 3 crore). Delhi Financial Corp CMD Dr D.C. Misra said,
"We shall disburse the first tranche during May." In July, the company
will launch the second tranche with a corpus of Rs 50 crore. At this stage it
will also issue an IPO to raise the fund. The third tranche is expected to be
launched by January 2001. This will have the biggest corpus of Rs 100 crore. Mr
Mishra said, "With an investment of Rs 170 crore, we expect the IT
revolution to gather momentum in Delhi and fulfill the Chief Minister’s vision
of Delhi being a cyber state by 2001."

A distinctive feature of DITV will be to fund projects that have social
relevance. Although the company will also fund commercial projects but those
that have a sectoral focus will have priority. For instance, projects to start
schools in slums to spread literacy, IT usage in health-related issues,
alleviating poverty and in spreading literacy.

Mishra defended the government’s decision to launch a venture fund when
there are so many in the private sector on the grounds that most of these funds
do not sponsor first generation entrepreneurs.

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