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UTI to set up venture capital, corporate restructuring funds

The Unit Trust of India will launch two new funds in the next four months exclusively for venture capital and for restructuring the industries in the country, UTI chairman P S Subramanyam said today.

Addressing a seminar on "Venture Capital: Driving Future Growth" in Bangalore, he said the venture capital with an outlay of Rs 2 billion would concentrate on promoting information technology, pharamaceutical and bio-technology industries.

The Corporate Restructuring Fund, in which Australia would be the main investor, would have an outlay of Rs 1 billion and would assist the units to gear themselves to meet the market demands and challenges.

The Venture Capital Fund would be launched in association with the ICICI, World Bank and Andhra Pradesh Venture Capital Fund, he added.

He said launch of more knowledge-based industries and venture capital could be seen in the next millennium which would play a major role. Software exports were expected to touch Rs 160 billion by the end of this century.

If the annual growth rate of 50 per cent was maintained, the exports were expected to touch Rs 8.60 billion by 2010. Nearly 10,000 more units are expected to be set up during the next ten years which would create an employment opportunity to the extent of 10 million. By the year 2020, it was projected to create employment opportunity for 50 million, he added.

Subramanyam said financial institutions should give priority to the venture capital sector.

Union Finance Secretary P G Mankand said opportunities for venture capital were excellent in the next millennium. Unlike the traditional investor who is only interested in getting high revenue for investement, the venture capital was meant for overall development as well as better return for the investor. It should be nurtured like any other sector, he added.

Karnataka Irrigation Minister R V Deshpande who read out Chief Minister S M Krishna's speech in absentia said the country's industrial growth rate should increase from six per cent to reach the top position.

He said there are 250,000 small scale industries in the state employing 1.4 million and contributed 14 per cent to the exports. The government would encourage the small sector, he pledged.

He said the government was making efforts to develop infrastructure by attracting more investment in the industrial sector. A taskforce for infrastructure development had been set up to look into various aspects.

Giving details, Subramanyam said the $86 million Venture Capital Fund and the $100 million Corporate Restructuring Fund will help entrepreneurs and businesses in the country. "The UTI Venture Capital Fund will include an offshore fund of $40 million and a domestic fund of Rs 2 billion ($46mn)," he said.

The Corporate Restructuring Fund would aid firms in mergers and acquisitions and would initially start with a corpus of Rs 1 billion ($23mn) and subsequently increase to $100 million.

"The VC Fund will be assisted by a panel of three experts who will work as investment advisors," Subramanyam said. He said N R Narayana Murthy, chairman, Infosys Technologies Limited, would help the UTI to woo information technology entrepreneurs in the US to use the VC Fund and set up enterprises in India.

He said AMP Limited, Australia`s largest mutual fund and insurance firm, would partner UTI in running the Corporate Restructuring Fund.

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