After lending to the small and medium enterprises (SME), ICICI bank, the country’s largest private lender will take equity positions in these companies. ICICI Bank is reportedly planning to set up a small and medium enterprises (SME) focussed private equity fund of $200 million. The proposed SME focussed fund would look at sectors like pharmaceuticals, jewellery, textile and capital goods.
ICICI bank has been making private equity investments through its venture arm, ICICI Venture. Now the bank would start taking equity positions in the SME space by itself. Sanjiv Sherawat, head of business banking, ICICI Bank Ltd said that the bank’s SME lending business is growing at a faster rate compared to other businesses. This growing SME lending business would add substantially to the total volume of the bank, he added.
SME remains the favourite sector of Banks. Small Industries Development Bank of India (SIDBI), a lender to small and medium scale enterprises, is going to roll out new equity schemes for small and medium enterprises through Rs 2,000-crore ($500 million) risk capital fund. According to a agency report, besides the funds allocated by the finance minister in the Union budget, SIDBI will seek participation of private equity players and venture capitalists for injecting risk-bearing equity capital into SMEs according to the bank’s deputy MD Rakesh Rewari.
Earlier media reports also suggested that (SIDBI) is planning to set up an asset reconstruction company (ARC) to buy non-performing assets in the SME sector. SIDBI Venture Capital Ltd, the venture capital arm of Small Industries Development Bank of India has made the maximum number of investments till now in the SME space in the country. Yes Bank is also coming up with various sector specific niche funds like cleantech fund, pharma-lifesciences fund and an education fund, but all targeting the small and medium companies.