State Bank of India, the largest public sector bank has entered into a joint venture agreement with State General Reserve Fund (SGRF), Sultanate of Oman to set up a general purpose private equity fund. The fund shall have initial target corpus of $100 million and is proposed to be expanded in future up to a level of $1.5 billion.
In a statement issued to Bombay Stock Exchanged, SBI has informed that the bank signed the joint venture agreement on July 14, 2010 aiming at investment in various assets in India. This is a part of sovereign level collaboration between the Government of India and the Government of Sultanate of Oman.
The initial $100 million corpus will be jointly contributed by SBI and SGRF. The fund would look at investments only in India, and will look for opportunities in all sectors of India permitted by regulations from time to time, said a release.
The management company shall be owned 50:50 by SBI and SGRF, with equal profit sharing by both sides.
Finance Minister Pranab Mukherjee said said that signing of JV agreement for the fund is part of the overall cooperation in various areas between India and Oman and will open a new chapter in the multi-dimensional relations between the two countries.
Last year, SBI has set up Macquarie SBI Infrastructure Management Pte. Limited, a joint venture between Macquarie Capital, the SBI and the World Bank’s private sector financing arm IFC, aiming at managing the Macquarie SBI Infrastructure Fund. Macquarie SBI Infrastructure Fund (MSIF) has taken off with initial investor commitment of above $1
billion. International investors had committed $887 million while SBI contributed $150 million to the fund last year.
SBI and Macquarie are the lead sponsors of the fund holding 45% each in the JV with IFC owning the balance 10%. The foreign institutions invest through MSIF while Indian financial institutions invest through another entity SBI-Macquarie Investment Trust (SMIT). Both the entities invest in domestic infrastructure projects.
In 2006, SBI Capital Markets Limited (SBICAP), the investment banking subsidiary of State Bank of India (SBI), and Softbank Investment, the venture capital arm of Japan's SBI Holdings Inc. had launched a $100 million venture capital fund aiming at investments in knowledge sectors such as BPO, KPO and life sciences. In 2008, SBI had bought a
20% stake in Mumbai-based Sage Capital Fund Management's $250 million special situations fund.