ICICI Bank Not To Tread Into ICICI Venture’s Turf; Drops Fund Plans
Finally, ICICI Bank has decided not to tread into private equity and venture capital business, which is the turf of ICICI Venture, its own private equity arm. The country’s second largest bank has decided to shelve the plans for a fund of funds and an infrastructure fund, reports The Economic Times, quoting Chanda Kochhar, Executive Director of ICICI Bank. Meanwhile, ICICI Bank has applied for a license to set up a non- banking finance company. If RBI approval comes through, it will be the second private sector bank after HDFC Bank to set up a NBFC.
As for the private equity business, last year, the bank had made plans to foray into the FoF business. It was looking to start with around $500-million fund and then expand it to around $2.5 billion with multiple closing.
Against the backdrop of the ongoing credit crunch, US subprime mortgage worries and increases in commodities prices, which has made difficult for fund of funds to make positive returns, the bank has decided to shelve its FoF business plans. Globally, FoF are finding it difficult to get higher returns and are working on strategies which can take advantage of higher volatility and higher dispersion while coping with the lack of liquidity in many financial markets.
On ICICI’s plans of not floating an infrastructure fund, Kochhar was forthcoming. She told the paper that they did not want to duplicate the efforts as ICICI Venture is already in business. ICICI Venture is already planning to set up infrastructure fund.
