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| UTI Ventures to raise 3rd fund |
| Shilpy Sinha / Mumbai Jul 08, 2009, 00:22 IST |
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The $400-mn fund will focus on infra services, domestic consumption & outsourcing
 UTI Ventures, the venture capital (VC) arm of UTI Asset Management Company (AMC), is raising a Rs 1,500 to Rs 2,000-crore ($350 to $400 million) fund and hopes to complete the process by December.
The third from the UTI Ventures stable, the fund would focus on deals in the range of $10-15 million (Rs 50-75 crore). Though the fund would invest across sectors, it would largely focus on areas such as infrastructure services, domestic consumption and outsourcing.
UTI Ventures is looking at domestic institutional investors (DIIs) — including insurance companies, mainly Life Insurance Corporation of India (LIC), and banks — and foreign investors such as sovereign wealth funds, endowment funds and private pension funds. Over the last 12-18 months, hedge funds have completely disappeared from the market.
“The number of institutions investing in VCs has come down, though there is more due diligence now. That is why fund-raising has become tougher now than what it was two years ago. As usual, investors continue to look at past performances of funds,” said UTI Ventures Director Private Equity Sunil Kolangara.
He, however, added that for UTI Ventures, raising the third fund was relatively easier than the first two.
Typically, VCs find it easier to raise funds in the second and subsequent rounds while the first-timers face difficulties.
UTI Ventures has completely utilised its second fund by investing in 17 deals. The second fund had a corpus of Rs 750 crore and its average deal size was around $10 million (roughly Rs 50 crore). In 2008, the second fund had made its last investment in Bangalore-based Deepak Cables.
The VC firm has completely exited its first fund Vintage 2000 and partially come out of one of the companies where it had invested from its second fund.
UTI Ventures has investments in sectors as varied as urban infrastructure services, apparel retail and alternative energy infrastructure. Some of its portfolio companies include Koutons Retail, Laqshya Media, Primus Retail, Shriram EPC and Subex Azure.
According to industry estimates, private equity (PE) players are likely to raise around $10 billion (approximately Rs 50,000 crore) this year. The turbulence in global markets has reduced investor appetite, thereby making it tough for PE firms to raise funds.
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