The Small Industries Development Bank of India (SIDBI) today said that it has tied up with the Life Insurance Corporation of India (LIC) for augmenting capital support to enterprises in the country. The idea behind tying up with the state-run insurance behemoth is to give a boost to the venture capital ecosystem for MSMEs, it said.
Under fund of funds operations, SIDBI handles various schemes, namely the India Aspiration Fund (corpus of Rs 2,000 crore), ASPIRE Fund (Rs 60 crore) and Fund of Funds for Startups (FFS) (Rs 10,000 crore).
In April 2016, SIDBI and LIC had signed a Memorandum of Understanding to supplement funds under the India Aspiration Fund. Under the MoU, the insurance major had earmarked an amount of Rs 200 crore for investment. As part of the first phase, LIC and SIDBI signed Contribution Agreements on January 03 in New Delhi with seven Venture Capital Funds (VCFs), with an aggregate commitment of Rs 99.50 crore from LIC. This is on top of the commitment of Rs 162.75 crore already given to these funds by SIDBI.
In order to bring in more professional outlook, SIDBI constituted a Venture Capital Investment Committee (VCIC). The panel comprises experts such as H. K. Mittal (head, National Science & Tech Entrepreneurship Development Board), Kiran Karnik (former Nasscom chief), Sanjeev Bikhchandani (founder, naukri.com), Saurabh Srivastava (co-founder, Nasscom and Indian Angel Network), Prof. R. Vaidyanathan (from IIM-Bangalore) and T. V. Mohandas Pai (former CFO, Infosys).
Commitments made by SIDBI in fiscal years 2015 and 2016 were Rs 314.40 (11 funds) and Rs 606.75 crore (19 funds) respectively. In the current fiscal, SIDBI has so far accorded formal sanction to 20 Alternative Investment Funds, with aggregate commitments of Rs 714 crore. In addition, there are cases cleared by VCIC that are under detailed appraisal and due diligence, said the company, a dedicated financial agency catering to the needs of MSMEs.
After constitution of VCIC in July 2015, out of 40 cases recommended by the panel, 32 funds have already been given final sanction by SIDBI for an aggregate commitment of Rs 1,006.75 crore, out of which 19 funds had announced first closing and have commenced investments..