SBI Capital Ventures Ltd (SVL), an alternative asset management arm of State Bank of India group, will float two funds – Small and Medium Enterprises (Rs 4 billion) and Affordable Housing Fund (Rs 3.5 billion). This is part of plans to expand the portfolio of funds under SBI Caps Ventures, a subsidiary of SBI Capital Markets Ltd.
Both funds are targeting closure of fund in the second half of next financial year (2019-20). SME Fund will be broad-based fund covering manufacturing and services sector.
The affordable housing fund will focus on four metropolitan areas of Mumbai, Chennai, Kolkata and New Delhi as well as Pune, Ahmedabad, Hyderabad and Ahmedabad. It will pick up stake in special purpose vehicle for particular housing project.
Varsha Purandare, Managing Director & Chief Executive Officer, SBI Capital Markets said “with these two new funds, we are looking forward to strengthening our foothold in the economically and socially relevant sectors.
These funds shall be an effective tool in addressing the equity gap in the SME sector and in improving the availability of affordable housing in India, Purandare added.
While the gap in debt funding to SMEs is increasingly being bridged by finance companies, there continues to be a significant gap in the equity funding for the sector despite the steep growth rate.
The SME landscape is expected to grow rapidly over the next few years. As per International Finance Corporation (IFC), it is estimated to account for over 40 per cent of the Gross Domestic Product (GDP) by 2020. Bridging the equity gap in the SME sector is crucial for the overall economic development and hence SVL’s launch of the SME Fund, said its Chief Executive M K Sharma.
In the housing industry, SBI is already the largest provider of home loans from the banking sector. Further, it has provided significant loan funding for construction of housing projects. And through its step-down subsidiary SVL, is now launching a private equity fund for providing a stimulus to improving the availability of affordable housing in India.