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Posted: February 18, 2008
SBI Capital Markets to set up a USD 100 million venture capital fund
(Nanowerk News) State Bank of India's subsidiary SBI Capital Markets plans to set up a USD 100 million (about Rs 400 crore) venture capital fund to invest in knowledge-based sectors in the country.
The SBI Capital Markets has already entered into a 50:50 joint venture Softbank Investment Holdings Inc of Japan for the fund.
The India Knowledge Fund will target specific India sectors including IT, knowledge process outsourcing, clinical research outsourcing, nanotechnology, online and mobile businesses, environmental technology and alternative energy, SBI said in its letter of offer filed with SEBI for its forthcoming Rs 16,736-crore rights issue.
The fund will invest primarily in unlisted, high growth companies through initial investments ranging from USD 3 million to USD 10 million.
India Knowledge Fund will be co-managed by both SBI Capital Markets and Softbank Investment Holdings.
Softbank Investment manages over 18 venture capital funds, making it one of the largest, most active venture capitalists in Asia.
SBI, under its proposed private equity and venture capital initiatives, is considering equity investments in core sectors such as power, telecom, petroleum, oil, gas, roads, ports, airports and hotels as well, the prospectus said.
SBI Capital Markets Ltd was set up as a wholly-owned subsidiary of SBI. In 1997, Asian Development Bank (ADB) picked up a 13.84 per cent stake in the company.
Meanwhile, SBI has appointed a consultant to formulate a stock option scheme for its employees. The bank is also proposing to increase the strength of its customer relationship executives from 1,400 to 2,400 by the end of March this year.
"Approximately 1,400 customer relationship executives handle distribution and servicing for high networth individuals and mass affluent customers, with another 1,000 expected to be hired by March 2008," the SBI said in the draft prospectus.
SBI is also planning to ramp up the strength of its officers cadre and has already advertised for recruitment of 1,000 probationary officers.
The decision to increase the number of retail relationship managers is expected to strengthen franchise arrangement for servicing high networth individuals, mass affluent groups and salaried employees.
SBI, with a network of more than 10,000 branches and around 6,000 ATMs, caters to 7.1 crore retail accounts, 6.5 lakh high networth individuals and 20 lakh salary accounts, the offer document said.