News: ICICI Venture plans 4 new specialised funds

(BL 13/09/2006) New Delhi - ICICI Venture is planning to set up four new specialised funds, including a small-cap fund, a mezzanine fund, a hedge fund, and a fund of funds. The size of the small-cap fund will be around $ 500 million. It will begin with a corpus of $ 200-250 million, which will be hiked to that figure within the next nine months. The mezzanine fund will have around $ 100 million. ICICI Venture has also tied up with seven of its key investors in its private equity funds that will co-invest with them in acquisitions and buying of stakes in companies. The need for a small-cap fund was felt because ICICI's current funds are for bigger deals, with an average size of $ 75 million. The small-cap fund will invest in smaller and emerging companies, which require a fund infusion of between $ 10 million and $ 50 million.

With many companies wanting expansion and fresh funds without losing control as a result of dilution of equity, ICICI also felt the need for a mezzanine fund, which would be a combination of debt and equity. It will protect promoters from losing control over their companies without compromising on growth. As a part of its strategy to become a one-stop shop for investors, ICICI is looking at setting up a fund of funds, an equity fund that invests in other funds. At present, ICICI Venture handles assets of over $ 2 billion, and is the largest equity fund operating from India. The existing assets include India Advantage Fund 2, aimed at buyouts and growth capital for small as well as mid-size and large companies and a $-500 million real estate fund that is looking to join hands with developers for commercial as well as residential projects.