Bangalore-based Canara Bank is planning to launch a Rs 500 crore ($125 million) venture capital fund, which could be an ambitious target since the fund raising environment is getting tougher. The fund will be the largest one from the bank and will be sector agnostic, accoreding to a in Business Standard. The bank has applied for permission for this fund to Securities and Exchange Board of India (SEBI).
Canara Bank already has a small venture capital fund – Canbank Venture Capital Fund – which was set up in 1989, the first to be sponsored by a public sector bank. The firm has launched four funds till date with an aggregate corpus totalling to Rs 112 crore and has invested in as many as 65 companies across various sectors.
The latest, named Bharat Nirman Fund, has a corpus of Rs 60 crore and its investors are Canara Bank, Allahabad Bank, Corporation Bank, Indian Overseas Bank, Oriental Bank of Commerce, Vijaya Bank, Andhra Bank and Small Industries Development Bank of India (SIDBI). Canara Bank will pitch the new fund to the government-owned institutions to join as investors. The average ticket size of Canbank’s investments is Rs5-9 crore but with the new fund this might get bigger.
Last year Canara Bank divested 49 per cent in its asset management business to Netherlands-based Rebecco, which is part of Rabobank. The public sector bank has also just announced a new joint venture insurance company called Canara HSBC Oriental Bank of Commerce Life Insurance Company Ltd. Canara bank will hold 51 per cent in this venture while HSBC and Oriental Bank of Commerce have a stake of 26 per cent and 23 per cent respectively.
The bank which has just announced its quarterly results reported a fall in net profit from Rs. 240.55 crore in the first quarter of 2007-08 to Rs. 122.68 crore in April-June 2008-09.
LIC Housing Finance To Launch Rs 500 Cr Real Estate Fund
India’s second largest housing finance company, LIC Housing Finance Limited, is planning to start a Rs 500 crore real estate fund by end of this fiscal year. The mortgage arm of LIC will soon approach the SEBI to set up an asset management company and is also looking for a banking partner, Business Standard. LIC Housing Finance is currently talking to to three banks and may sign an agreement soon, the report added.
LIC Housing Finance will be the promoter of the fund and plans to be a majority shareholder. Though LIC has no intention to directly enter the venture capital or private equity business, it may act as an investor to this fund. The fund will invest in 50-60 projects over a period of 18 months.
The Mumbai-based company posted first-quarter net profit of Rs.104.66 crores, which is a 124 per cent spike from Rs.46.69 crores reported in the previous year quarter.
LIC Housing Finance shares rose up by 8.61 per cent to Rs 257.35 at close of trading on BSE yesterday. The company is also planning to float a subsidiary in Mumbai to sell all the financial products which include home loans, mutual funds, LIC’s insurance policies, credit cards and other third party products.