Yes Bank to set up PE firm

Private sector lender Yes Bank plans to set up a firm, Yes Ventures, to house its private equity funds, in 2010-11.

“We are keen on having a centralised PE enterprise which will help incubate stand-alone and partnership funds,” Yes Bank Managing Director and CEO Rana Kapoor told Business Standard. The bank is in the process of closing a $200-million (over Rs 900 crore) cleantech private equity fund with US private equity investor Global Environment Fund.

The fund, proposed in June 2008, was expected to mop up $500 million (around Rs 2,300 crore at Monday's exchange rate). It will close this month. The Asian Development Bank and the International Monetary Fund contributed to the scaled-down fund. The vehicle will invest in cleantech-focused small and medium enterprises in South East Asia. More than half the money will be invested in India. Kapoor said it was possible that the cleantech fund would also be domiciled within Yes Ventures.

The bank plans to launch another fund in 2010-11 focused on small and medium enterprises and sunrise sectors once the venture is formed. A number of private sector banks such as ICICI Bank, Kotak Mahindra Bank and Axis Bank have independent private equity arms. On the Reserve Bank of India’s advice, State Bank of India is in the process of setting up a separate company for private equity activities.

“Our key differentiator is knowledge banking and our objective is to develop strategies in the private equity space to support our focus on sunrise sectors. In that respect, our firm will be different from other successful bank-sponsored PE ventures,” Kapoor said.