An investment banker, who had spent about two decades at Axis Bank and its investment banking subsidiary, will drive the recently-launched merchant banking operations of Small Industries Development Bank of India (SIDBI) targeted at small businesses.
Former Axis Capital executive GV Sreeram Kumar, who joined SIDBI last month, will spearhead the new entity that would focus on catering to micro, small and medium enterprises (MSMEs), especially those with a strong technology and innovation quotient. He was with Axis Bank for nearly 16 years before moving to Axis Capital as the head of its corporate banking and investment banking verticals.
Kumar will lead a three-member team, which will play a major role in helping private equity players looking for growth-stage opportunities in the MSME sector.
The new entity will also look to provide exit strategies for private equity firms by helping MSMEs access the capital markets through SME trading and institutional trading platforms, said Kumar.
As per the norms, MSMEs require a minimum paid-up capital of Rs 25 crore post issuance. Therefore, the deal size will start from Rs 25 crore and go upwards based on the size of the company, he added.
SIDBI has relationships with about 2,500 SMEs through its various units and looks forward to a healthy deal pipeline. Kumar said the new entity could increase the team size after three to six months, if required.
The merchant banking operation was previously lead by KI Mani, who is currently leading SIDBI’s fund of funds operations and the business for South and West region.
SIDBI’s deputy managing director Ajay K Kapur said that the company has supported over 125 venture capital funds so far, and the merchant banking operations will only be an extended service for listing the investee companies on SME exchanges.
SIDBI has been providing direct credit assistance to MSMEs for nearly two decades. Since, a good number of such MSMEs would like to list on the SME exchange, it is looking to connect the right investment opportunities to the funds. SIDBI would also like to help these funds with exit opportunities at attractive valuations, the company said in a statement.
Kapur said that significant increase in the number of venture funds in the startups and the MSME space, will create a large pipeline of fast-growing companies seeking public markets.