SBI Capital set to launch Rs 100 crore SME fund

SBI Capital Markets Ltd, the investment advisory arm of State Bank of India, is planning to float a dedicated small and medium enterprises (SME) fund with an initial corpus of Rs 100 crore in the next one and half years.

“The SME fund will be used to rope in private equity investment in SME, which otherwise is facing dearth of capital for furthering its business growth,” Rajeev Krishnan, executive vice president, SBI Capital Markets said on the sidelines of a seminar on SME here.

As SBI had many SME clients, this fund will definitely provide them with critical capital for growth, he added.

Small and medium enterprises in the country have not received much of interest from private equity players due to low capital base.

“Many PE players enter into an enterprise in the late growth phase with visible time frame for exiting the enterprise. So, we want to rope in PE fund to invest in the growth phase of a company,” Krishnan added.

SBI Capital Markets Ltd is also betting big on advisory services and upcoming FPOs (follow-on public offers) to drive revenue growth this fiscal.

“We expect to witness a 60 per cent rise in our revenue to Rs 1000 crore by end of this fiscal on the back of higher earnings from advisory services,” he said.

Investment advisory services, which contributes close to 60 per cent of the total revenue, will see further fillip due to recent public float norm.

“Advisory services in upcoming FPOs and higher activity in M&A space will drive revenue growth further,” he said.

He also said that disinvestment programme of central government in public enterprises would create opportunities in the advisory space.

Central government aims to generate $9 billion worth of proceeds from disinvestment in the current financial year.

The investment bank is also planning to play a larger role in mergers and acquisitions this fiscal by leveraging SBI’s banking relationship with Indian corporates.

In 2009, SBI Caps was involved in five major equity issues that raised Rs 136.5 billion.

This included mega issues like National Hydro Power Corporation (NHPC) Ltd that raised $1.25 billion and Adani Power, which raised $630 million from the capital market.

SBI Caps had syndicated loan arrangement of Rs 187,000 crore in the last financial year.