MUMBAI: India's largest venture capital firm, ICICI Venture, is raising $125
to $140 million for a new fund called the ICICI India Advantage Fund, which will
invest in four areas. The Renuka Ramnath, managing director and chief executive
officer, told Reuters in an interview on Tuesday that the fund will invest in
companies creating intellectual property, service sector firms, companies
building big retail brands in entertainment and media, and in private equity.
The service sector investments will be targeted at information technology,
telecom, Internet and business process outsourcing companies, Ramnath said. The
private equity investments could involve capital restructuring, funding
management buyouts or buying stakes in privately-held companies which have been
in existence for some time and may be moving toward selling shares to the
public, she said.
ICICI Venture is a subsidiary of ICICI Ltd., a leading Indian financial
service firm. The 13-year-old venture capital arm manages nearly $300 million
invested through 12 funds.
Link to Compaq computer
ICICI Venture has sold an eight per cent stake in one of its funds to Compaq
Computer Corp for about $4 million, Ramnath also said. She said Compaq had
bought the stake in ICICI Venture's self-financed e-fund, which is currently
valued at $50 million.
The sale is part of ICICI Venture's new strategy to move beyond being a mere
financier and passive investor, to playing a more active role in companies in
which it invests, said Ramnath, who took charge of the venture capital company
three months ago. The Compaq tie-up is an example of the sort of alliances ICICI
Venture looks to forge to add value to its investments.
"They (Compaq) have products and services in the technology space and if
I am investing in a chip company, I have Compaq as a testing ground
immediately," Ramnath said. "I will check with them how useful the
product is, the difficulties in scaling up." "The focus going forward
is that ICICI Venture is not going to be a deal-driven organisation. It is going
to be focused on building expertise and bringing that expertise to our invested
company," she said.
Raising new funds
Ramnath said ICICI Venture might participate in second round funding of
companies it helped start up. But in the future, ICICI Venture would prefer to
be a second-round investor in service sector companies, "rather than create
more new ventures in the current market scenario and walk them through the
struggle of being an infant company," Ramnath said.
She also said ICICI Venture would soon start cashing out of investments made
more than 18 months ago. "We had committed Rs 4 billion in the last one to
one and a half years, but capital that was committed before that is in
harvesting stage," she said. She said several exit options were being
considered including preparing some of the companies for IPOs and looking for
strategic sale of its stake for some others.
(C) Reuters Limited 2001.