Private Equity & Venture Capital

The Private Equity/Venture Capital (PE/VC) investments in India commenced in the early 90s and the same has grown substantially over the years. Private Equity is a specialized field where investors acquire a significant minority or even majority stake in companies. Investors normally take a hands-on role in the operations of the company and contribute towards accretion of value by virtue of specialized skills that they bring to the table. The gestation period is often quite long and could extend beyond 5 years before we start getting any returns. It is worth considering only if we want to tie up our funds that long. Private Equity investments require regular attention and follow-up of a significantly different nature compared to the portfolio of secondary market investments. Further, risk associated with this kind of investment is very high. That is why our approach has been to Grow Selectively".

Private Equity Investments can be done by two means; one by acquiring direct stake in the company and the other by way of investing in a Private Equity/Venture Capital fund which is akin to investing in a mutual fund. However, while mutual funds primarily invest in listed companies, private equity fund/venture capital funds invest in unlisted companies.

The Bank made its foray into the business of Private Equity and Venture Capital (PE/VC) Investments in 2003 when an investment of Rs 84.38 crore was made in India Development Fund, a fund floated by IDFC Private Equity Co Ltd. Initially, such investments were being made under the Domestic Investment Policy. Such investments were at that time managed by the Rupee Treasury Section of Global Markets Department (then known as Treasury Department).

Alternate Assets Group was conceived and created within the Global Markets Department (earlier Treasury Department) in February 2008 and a General Manager (Alternate Assets) was posted to head the group. The group was entrusted with the task of managing Bank's investments in Private Equity/Venture Capital Funds. A separate policy for Bank's investment in PE/VC was approved by the Central Board on 11th June 2008 and put in place.

In December 2013, Private Equity investments of Bank's New Business Department were consolidated in the Global Markets and the entire portfolio was brought under Private Equity vertical. Thevertical is currently headed by General Manager-Private Equity, who looks after the PE/VCF portfolio of ~Rs 3000 Crore. In addition to PE-VCF investments, our Bank has also floated two Joint Venture Funds; one with Macquarie group of Australia and the other with State General Reserve Fund of Oman. Besides, we have alsocommitted Rs 52.00 Crore in 2 Asset Reconstruction Funds.