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SIDBI plans overseas fund

Rajalakshmi Menon

MUMBAI, Dec. 24

SMALL Industries Development Bank of India (SIDBI) is planning to float an overseas fund for software and IT projects.

The object of this fund would be to enable domestic companies globalise operations, set up overseas subsidiaries, enter into strategic tie-ups and get Nasdaq listings.

The corpus of this fund is estimated at $30-40 million.

The overseas fund would be the third tier of funding that SIDBI would provide to the software and IT industry.

At the first level is the State and regional funding, which SIDBI has launched in association with State-level institutions, banks and corporates.

The second is National Fund for Software and Information Technology (NSFIT), launched along with the Union Government and IDBI, with a corpus of Rs 100 crore.

At the State and regional level, the bank has financed 12 funds in 10 States so far. Five of these funds are now operational with a corpus of Rs 15-25 crore each.

SIDBI is also working on a project to incubate start-ups and other such projects with the help of research and development institutions.

On the performance of NSFIT, which commenced operations in March, Mr Rakesh Rewari, CEO, SIDBI Venture Capital Ltd, said that it has committed investments to 19 companies amounting to Rs 45.94 crore.

Of this amount, disbursements amounting to Rs 7.35 crore have been made to five companies.

``The focus of NSFIT is on small and medium projects. It has a limited exposure to dotcom companies,'' he said.

He also said that NSFIT had taken a cautious stand while investing in dotcom companies and of the 19, only three are dotcoms.

``We look for companies with strong business plans and saleable revenue models. Therefore, the fall in valuations of dotcoms has not had a significant impact on NSFIT,'' Mr Rewari added.

According to him, since exits were made from venture capital investments after 2-3 years and with NSFIT having made its first disbursement only in March 2000, it was still early to assess the success rate.