GVFL divested in 7 startups in '04-05

Venture finance and managerial support services company GVFL Ltd (formerly known as Gujarat Venture Finance Ltd) has sold its holding in seven companies in 2004-05.

Vishnu Varshney, chief executive officer, GVFL, said: "We have divested our holdings in Deccanet Designs, Permionics (I), H K Finechem, IBABC, Microcon IVS, Dinesh Polyber and Radiant Software in 2004-05."

"We would ideally like to exit from companies we have invested in a span of three to five years. However, since we invest in start-ups and early stage companies, the gestation period is longer. Whenever we see an opportunity of making good returns by way of a strategic sale, we look go in for divestments."

Commenting on the profitability of these divestments, Varshney said: "Permionics (I), HK Finechem, Deccanet Designs and Radiant Software have been successful exits made by GVFL Ltd in the last year. GVFL earned more than 6 times its investment in Deccanet. This is probably one of the highest returns that any seed capital investment has achieved in the country. The divestments of the past year lead to GVFL's divestment ratio being 68 per cent, which is high compared to industry standards."

GVFL has so far sold 38 of its 56 investments made by its first four venture capital funds. The exits have been made usually through strategic sale, trade sale, sale of shares through primary market and some times, in case of living dead companies, through company and promoter buyback.

"Apart from raising funds for the Gujarat biotechnology fund, our target is to increase the corpus of the Gujarat IT fund from Rs 26.6 crore at present to Rs 35 crore," Varshney said.

GVFL has successfully divested from small start up technology companies in the past year, which is a very difficult feat for most venture capital firms. In the current year, GVFL will also focus on exiting non-profit companies and maximizing redemptions from existing funds.

GVFL Ltd, formerly known as Gujarat Venture Finance Ltd, is widely regarded as the pioneer of venture capital in India. Started by Gujarat Industrial and Investment Corporation at the initiative of the World Bank in July 1990, GVFL Ltd is an independent board-managed, autonomous venture finance company based at Ahmedabad.

Over the past 15 years, GVFL Ltd has raised four venture capital funds with a combined capital of Rs 125.62 crore, which is invested in 56 companies across the country. Some of GVFL's success stories are Deccanet, eInfochips, Icenet, Scicom, Net4Nuts, Parsec Technologies and Neilsoft.