HITVEL to privatise IT venture fund

Hyderabad Information Technology Venture Enterprises Limited (HITVEL), the public sector asset management company, is all set to go private.

The management of the company has decided to set up an IT venture fund with a size of more than Rs 100 crore by bringing private venture capitalists into its fold.

"We have even deferred the decision of appointing the chief executive officer to the company so that the future fund management under private sector can function independently," C Balagopal, whole-time director of HITVEL, who is also holding the additional charge of CEO, told Business Standard on Monday.

Jointly promoted by Andhra Pradesh Industrial Infrastructure Corporation (APIIC), Andhra Pradesh Industrial Development Corporation (APIDC) and public sector Small Industries Development Bank of India (Sidbi) in 2000, HITVEL had set up a Rs 15-crore IT venture capital fund with Sidbi contributing 50 per cent of the corpus.

The remaining investment was equally contributed by APIIC and APIDC. It has invested about Rs 12.5 crore in six IT and ITeS companies, which, according to Balagopal, has now grown into a total annual turnover of Rs 30 crore.

According to him, Sidbi too has agreed to invest in the new venture fund. As far as APIIC and APIDC are concerned, they are planning to approach the state government to seek a seed fund of around Rs 15 crore as was done in the case of bio-venture fund to participate in the new fund, Balagopal said.

The decision to privatise the IT venture fund management is yet to receive a formal approval from the state government.

"At present, there are several venture capitalists in the country who are willing to invest in companies only after they reached the take off stage. But what we need is a fund which will be available for the start-up and small and medium companies as HITVEL has rightly targeted at for further growth of IT industry," Balagopal said, adding that there has been a tremendous demand for venture fund at the start-up level in the state.

Based on the real need, HITVEL has decided to set up a fund with a size of Rs 100-Rs 150 crore similar to the size of the APIDC-promoted bio-venture fund and the Gujarat IT venture fund.

Balagopal said that HITVEL is currently in the process of identifying potential investors for the new venture fund and would soon invite them to join and take over the management of the company. There would be more than one IT venture fund that would be set up by the company in future as and when there will be demand for investment, he added.

"We are also open to inviting overseas venture capital, including the US venture fund," he said.

Meanwhile, Sidbi has appointed Gujarat IT venture fund managing director Vishnu Varshney as its nominee on the HITVEL board.