HCL follows Future Group, plans $1 bn venture fund

Shiv Nadar-promoted HCL Enterprise, which owns HCL Technologies and HCL Infosystems, is planning to form a venture capital (VC) arm and tap the bourses to raise close to $1 billion (Rs 4,500 crore) through an initial public offer (IPO).

The venture, on the lines of Kishore Biyani’s Future Ventures India, will focus its investments in the information technology sector, said a source familiar with the development.

The initiative will be headed by Nadar, chairman and chief strategy officer, HCL Technologies. The plan is at an early stage. An email sent to Shiv Nadar’s office remained unanswered.

“Top executives of HCL have been in touch with investment bankers involved in the Future Ventures’ issue to understand the process,” said a source close to the development on condition of anonymity.

The IPO would be the first of its kind for the IT industry in India. Until now, VCs have been raising funds through private investors and not through the public. Kishore Biyani’s Future Ventures India, which recently received Securities and Exchange Board of India (Sebi) clearance, is one of the first VC funds in India to raise funds from the public and invest in related firms.

However, the concept of VCs raising money through the capital market has been prevalent internationally. For instance, Investor AB, listed on the Nordic exchange and controlled by the Wallenberg Family, owns venture funds. Another example is Warren Buffet’s Berkshire Hathway.

In India, Future Venture filed the Draft Red-Herring Prospectus (DRHP) for an IPO to raise around Rs 3,700 crore by selling over 373 crore equity shares of Rs 10 each. The price of the shares will be fixed through the process of book building.

Future Ventures, in its DRHP filing, stated that it may acquire interests in large, mid-sized and small assets and over a period of time dispose of a portion of these majority equity interests in a manner that results in a minority holding.