Venture capital investor VenturEast has started raising its eighth fund, VenturEast Life Fund III LLC, focusing on high-growth small and medium enterprises (SMEs). The fund has applied to World Bank’s private equity arm International Finance Corporation (IFC) for commitments of upto 20% of the total commitments raised. The target size of the fund is not known.
When VCCircle contacted Sarath Naru, the founder and managing partner of VenturEast, he said target size is still under discussion. On being asked to comment on this development, he quipped that there is no “development” till the first close is done.
IFC was also an investor in the $150 million VenturEast Proactive fund. The two organizations also recently came together with Bharatiya Yuva Shakti Trust to launch $5 million microequity fund, which provides equity-like support to small and disadvantaged entrepreneurs.
Interestingly, VenturEast Life Fund is looking at mezzanine investments besides equity and equity-related investments. The fund will also focus on investments outside main Indian metros, which is Tier II, Tier III cities and rural India. The new fund will look at areas like healthcare delivery, pharma related companies, food & agriculture and cleantech.
The fund will be managed by VenturEast Mauritius Investment Advisors and APIDC Venture Capital Private Limited. APIDC VC was started as a joint venture between Dynam Ventureast Private Ltd, which held a 51% stake and Andhra Pradesh Industrial Development Corp. Ltd (APIDC), which held the remaining stake. The fund was later privatized with APIDC holding only 1% stake.
The fund will also raise monies from domestic institutions simultaneously in a different entity. VenturEast, one of the oldest fund managers in the country, has raised capital from investors like UK-government backed fund-of-funds CDC, US-based Argonaut Private Equity, Saudi Economic and Development Co., Life Insurance Corp. of India (LIC) and internet giant Google for its earlier funds.
Several private equity and venture capital funds are looking at investing in rural economy. This area is a relatively underserved segment of the market and is witnessing an increasing growth in demand for goods and consumer products. Till now PE & VC funds in India have mainly focused on opportunities serving the urban spending.
Many of the recent private equity deals have been in rural segment,especially in food and agriculture based firms. Zephyr Peacock, which raising its second fund targeting $75 million, is also looking at this area.