Intel Cap invests Rs 105 crore in three Indian companies

Intel Capital, the investment arm of technology giant Intel, announced today an investment of $23 million (around Rs 105 crore) in three Indian technology firms — July Systems, KLG Systel and commodity futures electronic exchange MCX. It did not disclose the individual amounts invested. Intel will fund these investments through its $250-million Intel Capital India Technology Fund, set up in 2005. Including these investments, Intel Cap has invested over 60 per cent of the fund.

Intel Capital has invested more than $9.5 billion in over 1,050 companies in 47 countries. The company has been investing in India since 1998. It has invested more than $200 million (over Rs 920 crore) in India (including today’s announcements) across more than 60 companies.

The company said it would focus more on new investments in 2010. Unlike 2009, when it chose to concentrate on portfolio firms and made follow-on investment.

“Last year, we did see a need to focus on portfolio firms due to the global economic situation and hence our follow-on investment was also high. But, this year, portfolio firms are in a better position. For 2010, we do see a shift towards new investments,” said Arvind Sodhani, President of Intel Capital and Intel’s Executive Vice President.

Intel Cap was one of the few venture capital outfits who continued to invest in the downturn as well. For 2009, the VC firm invested $327 million, including $100 million in new investments globally. It made 107 investments worldwide, including 25 new investments and 82 follow-on investments in portfolio companies. Of this, half its dollar investments were made outside the US and Canada.

In India, last year, the VC firm closed five deals, of which three were follow-on. In 2008, Intel Cap invested $51 million (Rs 233 crore) in nine companies in India – six of these were new investments, while three were follow-on.

Of the three new Indian investments, KLG Systel, listed on the Bombay Stock Exchange and the National Stock Exchange, got the money through a PIPE (private investment in a public equity) transaction. “Intel has invested through the secondary market. They have acquired these shares through the FCCB (foreign currency convertible bonds) route. We will not get any funds from Intel Cap,” said Kumud Goel, Managing Director, KLG Systel.

He added they would be leveraging Intel’s ecosystem for the development of its new products and solutions. The firm provides smart grid and energy management and efficiency solutions.

Investment in MCX, too, is through the secondary markets. However, the company declined to mention who had sold its stake in the commodities future exchange.

It was earlier reported that Fidelity, with nine per cent stake in MCX, was planning to sell two per cent of its holding in the company to help meet the regulatory cap of five per cent stake in such cases. However, Intel Cap declined to comment on this. It would be taking MCX’s online trading to 6,000 cities in India.

Mobile internet solutions provider July Systems, which is an early-stage investment for Intel Cap, plans to use the funds to grow its sales, business development and operations teams in North America and the Asia Pacific. In addition to the investment in research and development. Sequoia Capital has also invested in July Systems.

“Investing in electronic financial exchanges, smart grid technology solutions and mobile Internet-enabling technology platforms demonstrates Intel Capital’s strong commitment to India’s ongoing infrastructure build-out, as aligned with the national agenda,” said Sudheer Kuppam, managing director, Intel Capital Asia Pacific.