SBICAP launches funds for SME and affordable housing

The SME fund is expecting to raise an amount of Rs 400 crore, while the affordable housing fund is expected to raise about Rs 350 crore.

Two funds schemes have been launched for the small and medium enterprises (SMEs) and affordable housing sectors SBICAP Ventures (SVL) which is an alternative asset manager and a wholly owned subsidiary of SBI Capital Markets.

The SME fund is expecting to raise an amount of Rs 400 crore, while the affordable housing fund is expected to raise about Rs 350 crore.

As per media reports, SBI Capital Markets managing director and chief executive officer Varsha Purandare said, “for the SME, we want to start with Rs 400-crore fund. It will be an equity fund and there will be two anchor investors, SBI and SBI CAP/SVL.”

She further added, “we are expecting an internal rate of return (IRR) of anywhere between 18 per cent and 22 per cent.”

As per reports, the SME fund will be starting in September 2019 and the first close, which will be at least 60 per cent of the fund, or around Rs 240 crore, is expected by June 2020. In fact, country’s largest lender State Bank of India (SBI) is limited by 10 per cent and SBI Capital will be putting in another 10-12 per cent.

In the initial stage, the emphasis will be on eight major cities, Mumbai Metropolitan Region, National Capital Region, Kolkata, Bengaluru, Chennai, Hyderabad, Ahmedabad and Pune.

It is expected that the funds will be deployed in at least seven to eight projects. Approximately Rs 35-50 crore in each project, which meets the RERA guidelines on affordable housing. Also, the fund will limit itself to maximum of 30 percent investment in a city or a maximum of 30 per cent to a developer, according to Varsha Purandare, managing director and chief executive officer of SBI Capital Markets.

Earlier, SBICAP Ventures had launched a fund named Neev Fund in 2015 with a focus on the low-income states for small infrastructure projects. The fund was launched in partnership between SBI and UK’s Department for International Development.

Purandare also mentioned that the total corpus of Neev Fund as on date is Rs 430 crore after the first close, and the investible amount is around Rs 382-383 crore. Moreover, the firm is expecting additional funds, which will take the fund size to Rs 525 crore, she added. As per reports, the fund started its first investment in February 2016, and invested in nine projects, with a total disbursal of Rs 260 crore so far.

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