CanBank has received a go-ahead from its trustee and a consultant has been appointed as well. The firm expects all the approval process to be completed in another two months from now post which the fund raise will be started.
Canbank Venture Capital Fund, the private equity investment arm of public sector bank Canara Bank, is gearing up to launch its sixth fund soon. The company has submitted an application to the regulator, Securities and Exchange Board of India (Sebi), for its nod to raise Rs 630 crore from a group of PSU financial institutions.
S Thiruvadi, managing director of the fund, told dna the company would raise $100 million for the new fund. "The investment theme under this fund will be slightly different with more focus on start-ups and late-stage. We are yet to take a call on the ticket size because for start-ups it would range anywhere between Rs 1 crore and Rs 3 crore while for growth expansion it can be between Rs 10 crore and 40 crore," said Thiruvadi, adding that specifics about the fund are still being worked out.
CanBank has received a go-ahead from its trustee and a consultant has been appointed as well. The firm expects all the approval process to be completed in another two months from now post which the fund raise will be started.
"We don't see any challenge in raising the money as existing contributors are very comfortable with us. We might reduce the number of contributors in this fund though. The earlier fund had 18 contributors and we may reduce it to just 7-8 contributors investing anywhere between Rs 35 crore and Rs 100 crore in the sixth fund. We will target on average 3-4 investments every year from this fund," he said, adding that the internal rate of returns (IRRs) expectation in this fund will be between 20% and 25%.
The company will also be acting as a fund-of-funds for a Rs 2,200 crore Electronic Development Fund, the contribution for which will be done entirely by the central government. "We have been appointed as managers of this fund where we will be investing in other venture capital and private equity funds. The investment theme will be electronics, nano technology and information technology sectors. We should be rolling out the sanctions in another three to four weeks time," said Thiruvadi.
As fund-of-funds, Canbank will invest in a dozen odd investment firms. The money to be invested in these private equity / venture capital funds will range from a under 10 cores (in case of very early stage investment firms) to a couple of hundred core (in the case of growth and late stage investment firms). The holding period in this case will be seven years extended by two years giving an internal rate of returns (IRRs) of around 10% net.
On CanBank's fifth fund i.e. Emerging India Growth Fund with a corpus of Rs 435 crore, Thiruvadi said it is almost completely deployed. "Three more investments will be made from the fifth fund and discussions are in very advanced stages. These investments will be closed in another 10-15 days from now," he said Thiruvadi adding that the companies being invested into are operating in pharma, healthcare and ITeS sectors.
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