ICICI Venture Funds Management Co Ltd, one of India's largest private equity players, reported a fall in fee income to Rs 157 crore in 2009-10 to an income of Rs 183 crore on 2008-09. ICICI Venture, an arm of India's largest private sector lender ICICI Bank, reported profit before tax Rs 74.4 crore in FY10, according to the firm's annual report.

The profit before tax of ICICI Venture fell dramatically from Rs 203 crore in FY09 on account of the payment received from selling its stake in its real estate joint venture. The annual report reveals that ICICI Venture made a non-recurring profit of Rs 137 crore from divestment of its stake in TSI Ventures (India) Pvt. Limited, a joint venture between ICICI Venture and US-based real estate investment firm Tishman Speyer. The profit before tax stood at Rs 127 crore in FY08 and Rs 107 crore in FY07.

The private equity major, which has $2 billion under management, will also launch its first infrastructure-focused fund and a real estate fund this year. ICICI Venture has "commenced initial preparation and ground-work, both in terms of thesis and building of teams, for raising its maiden Infrastructure fund as also a pure domestic real estate fund," said the report. The report added that India Advantage Fund Series 3 held a second close of Rs 1,560 crore in February 2010 and is witnessing strong deal flow.

ICICI Venture's income from investments in venture capital fund increased to Rs 13 crore during the year compared to the previous year’s income of Rs 11 crore. Operating expenses were at Rs 110 crore compared to Rs 142 crore in the previous year.

The report said, India Advantage Fund Series 1, which raised Rs 1,090 crore, has invested in 21 companies of which 10 have been fully exited along with six partial exits. These exits have resulted in a combined realisations of Rs 2,220 crore, which imply an internal rate of return (IRR) of 62.7% on a MoC (multiple on capital) of 3.1 times. It has also initiated the exit process for the fund’s investments in portfolio companies in the diagnostic services and pharmaceutical intermediates businesses.

The private equity firm said, India Advantage Fund 2, which had managed to raise $810 million, has made commitments of Rs 2,680 crore to 21 companies. After the departure of Renuka Ramnath, which the report terms as a trigger event, this fund is allowed to make follow on investments in existing portfolio companies but not any fresh investments. This also resulted in changes in the management fee structure, said ICICI Venture, which would explain the reduced fee income for FY10.

IAF 2 made follow on investments in four portfolio companies totaling Rs 80 crore. The fund proceeded with sale of shares of portfolio companies in a banking company and a partial exit in the power transmission sector where it realised Rs 260 crore.

ICICI Venture has also extended the commitment period of its mezzanine fund by six months from original expiry date of May 7, 2010 to November 7, 2010. This fund has made three investments aggregating Rs 92 crore and exited one of them last year. The fund is in advanced stages of evaluation of one new deal and is expecting to conclude this investment in the near future, said the report.

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