Hyderabad IT Venture mulls raising its corpus

Size of venture fund to be decided in next board meeting

Hyderabad Information Technology Venture Enterprises Limited (HITVEL), a public sector asset management company, is contemplating raising its corpus to a considerable level from the existing Rs 15 crore.

The move is aimed at cashing in on the growing opportunities in the software sector. HITVEL is also toying with the idea of including private sector contributors on the board for this purpose.

"All the proposals will be discussed in our next board meeting, and the board will take a final view on the issues including the total size of the venture fund," C Balagopal, whole-time director of HITVEL, told Business Standard.

Instituted in 2002 with an initial corpus of Rs 15 crore, HITVEL is jointly promoted by Small Industries Development Bank of India (SIDBI), Andhra Pradesh Industrial Development Corporation (APIDC) and Andhra Pradesh Industrial Infrastructure Corporation (APIIC). So far, HITVEL has invested its total corpus of Rs 15 crore in about five small-scale IT companies.

These companies were shortlisted out of the 250 applicants for its equity participation over the last five years, according to Balagopal.

"We were not only extra cautious in choosing the projects, but were also bound by the limitations on account of a relatively small fund that we had to deal with," he said.

Responding to the capital requirement of the small-scale IT companies after gaining confidence over such ventures, HITVEL had, in March 2005, increased the investment cap as a proportion to the total corpus from 10 per cent to 20 per cent. This means that the company can now invest up to Rs 3 crore in a company.

HITVEL has already ventured into the second round of investment by increasing its investment cap in Catalytic Software Limited. Catalytic Software is one of the five small-scale firms that HITVEL had invested in.

With the company's exit period ranging between four and five years, and an initial public offering where the promoter himself can buy the equity or through a merger and acquisition as the mode of exit, some movement towards this direction is expected from these software companies during the current financial year.

While SIDBI contributed 50 per cent to the corpus of the HITVEL, the remaining money was provided equally by APIIC and APIDC.