Striking it big: ICICI Venture to raise $1 billion via three new funds

ICICI Venture, one of the country’s first home-grown private equity (PE) funds, will raise around $1 billion through three funds.

These include a new start-up fund (an area which the company is re-entering after two decades) of $200-300 million, a new real estate fund of $300-400 million targeted at smart office spaces, and a follow-up of its existing PE fund which is close to getting fully invested and has a proposed size of about $300-400 million. The probable timeline for the fundraise is one to two years, depending on the overall market conditions.  

On ICICI Venture’s strategy of raising new funds, Puneet Nanda, managing director and CEO, says : “We are not targeting which year — it could  take one year or two. We are not impatient and many new ideas may also emerge.”

Nanda says that for the start-up fund, the company is virtually starting from scratch, as it has not done anything in this area for two decades. (ICICI Venture was the first company to invest in Sanjeev Bikhchandani’s naukri.com) “So a lot of background work is being done on which areas to invest in and we are also talking to companies. It looks like it will be mid 2022,” he adds.

ICICI Venture is also looking at other opportunities such as investing in companies which are eligible for the production-linked incentive (PLI) scheme in the manufacturing sector. It is also assessing the credit business, especially as banks are increasingly getting wary of providing loans to mid-sized and smaller companies. 

Some of the latest deals by ICICI Venture

• Divests half of its 13.5% stake in Go Fashion (India) through an IPO. Makes 5x return on its investment
• Picks up 20% stake in ePack Durables, outsourced manufacturers of ACs for Rs 160 cr
• Buys minority stake in KIMS Hospital, three years after exit. Hospital goes for an IPO later 
• PTC India selects Resurgent Power, a JV between Tata Power and ICICI, and others to acquire 100% shareholding in a special purpose vehicle to run stressed transmission assets across 3 states

For instance, one of the company’s investments this year has been in ePack Durables, a non-listed, outsourced AC manufacturing company, which is the second largest in the country, and one which is already eligible for the PLI scheme. 

Says Nanda: “The AC industry is doing well. And schemes like the PLI help in increasing revenues and improving bottom lines. We will surely look at more opportunities in the PLI space”. On their foray into the credit business, Nanda says: “We are seeing the evolution of a private credit market. Corporations are looking for credit and we will carefully assess this market.” 

The company points out that historically, credit was given by banks and financial institutions. However, thanks to various restrictions, loans have become hard to come by as one goes down the credit curve. 

ICICI Venture does, of course, have experience in this space through its joint venture with Apollo (the fund is fully invested now) which had the option of providing debt.