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SBICAP Ventures launches SME, affordable housing funds

SBICAP Ventures (SVL), an alternative asset manager and a wholly owned subsidiary of SBI Capital Markets, Monday launched two funds for the small and medium enterprises (SMEs) and affordable housing sectors.

The SME fund is expecting to raise a corpus of Rs 400 crore, while the affordable housing fund would look at raising Rs 350 crore.

“For the SME, we want to start with Rs 400-crore fund. It will be an equity fund and there will be two anchor investors – SBI and SBI CAP/SVL,” SBI Capital Markets managing director and chief executive officer Varsha Purandare told reporters.

“We are expecting an internal rate of return (IRR) of anywhere between 18 per cent and 22 per cent,” she added.

The SME fund will be starting in September 2019 and the first close, which will be at least 60 per cent of the fund, or around Rs 240 crore, is expected by June 2020, according to Purandare.

Country’s largest lender State Bank of India (SBI) is limited by 10 per cent and SBI Capital will be putting in another 10-12 per cent, she said.

She noted that while the gap in debt funding to SMEs is increasingly being bridged by non-banking financial companies (NBFCs), there continues to be a gap in the equity funding for the sector despite the steep growth rate.

For the affordable housing fund, again an equity fund, Purandare expects the first closure, which is at least 60 per cent, or Rs 210 crore, by December next year.

The fund will invest in project-specific venture and the company is expecting an IRR of 20 per cent for the same, she said.

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