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GVFL to raise Rs 100 cr for SME Fund

Virendra Pandit

Ahmedabad , July 3

GVFL Ltd is coming up with its largest-ever fund of Rs 100 crore by this year-end for small and medium enterprises (SMEs) to address their needs for adequate and timely finance to achieve global competitiveness.

The company is also in the process of raising Rs 50 crore towards its biotechnology fund, which has become operational. It is evaluating proposals for investment in the biotech sector, and also planning to soon divest out of some of its successful ventures from the previous funds.

The SME Fund would be set up as a 10-year, close-ended fund with an objective to achieve long-term capital appreciation, the GVFL Ltd's Managing Director, Mr Vishnu Varshney, told Business Line.

The target sectors for SME Fund include information & communication technology, IT-enabled services, telecommunication, healthcare and life sciences, education, engineering and non-conventional sources of energy, he said. The investment focus would include new projects, expansion and diversification, management buy-outs, product development, privatisation and hive-offs.

With its SME Fund, GVFL will, for the first time, enter into growth-stage funding along with start-up funding.

GVFL Ltd (formerly known as Gujarat Venture Finance Ltd), an independent, board-managed, autonomous venture finance company based here, was started by Gujarat Industrial and Investment Corporation at the initiative of the World Bank in July 1990. GVFL Ltd has since developed into a specialist in funding small and medium-scale technology-based innovative companies.

Over the past 16 years, the company has raised five venture capital funds (VCFs) - GVCF 1990, GVCF 1995, GVCF 1997, Gujarat Information Technology Fund and Gujarat Biotechnology Venture Fund - with a combined capital of over Rs 130 crore. These funds have been invested in 57 companies. Altogether, 19 companies are doing well and all of them are based on innovative technologies. GVFL has divested from 43 out of 57 companies.

GVFL Ltd has seen one of the most successful exits when one of its portfolio companies, Deccanet Designs, was acquired by Flextronics. Some other GVFL Ltd significant success stories include Scicom, Net4Nuts, e-Infochips, Parsec Technologies and Neilsoft. Mr Varshney said India had some 40 to 50 venture capital firms but those who invest at an early and start-up stage numbered only half-a-dozen.

Asked if GVFL Ltd has identified other companies to invest, he replied in the affirmative, saying he was evaluating a few biotech companies.

"We are also evaluating a few of the proposals drawn by Nirma University students and may even invest in an incubator if the business plan and promoters are sound.

Replying to a question, he said the fund could consider investing in modern allopathic hospitals for promoting health tourism, if it is a profitable venture but not in ayurvedic centers on the Kerala-model as ayurveda's gestation period is rather lengthy.

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