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ICICI Venture fund to raise $125-140 m

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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.

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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.

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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.

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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.

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