India’s Canbank to launch $118m fund

Canbank Venture Capital, one of India's oldest venture capital firms, is set to launch its fifth and largest fund to date.

Canbank Venture Capital, the wholly-owned private equity subsidiary of Canara Bank, is launching a private equity fund worth 5 billion Indian rupees ($118 million; €75 million). The firm will start fundraising once it obtains regulatory approvals.

P.G. Chawla, managing director of Canbank Venture, told PEO that the firm’s parent company Canara Bank will invest 20 to 25 percent of the fund’s capital and the balance will be raised from institutions such as other national banks in India.

Chawla said that the fund will look to make investments in sectors where tax remissions are available for venture capital funds. There are about 10 business interest areas where whatever is earned through venture capital investments is not taxed, he said. These sectors include IT, nanotechnology and other technology-related sectors.

Once permission to launch the fund is obtained, he said, fundraising is likely to be completed in about three months’ time.

According to Chawla, the fund will make mainly venture capital investments and a few growth capital investments and will commit a maximum of 750 million Indian rupees per transaction. The larger size of the fund allows it to make bigger investments as compared to the firm’s previous funds, Chawla said.

Venture funds in India are only permitted to invest up to 15 percent of the their capital in any single transaction. The firm's previous offering, the Bharath Nirman Fund, was a $15 million fund from which the firm could only invest up to 90 million rupees per transaction. The Bharath Nirman Fund is now fully invested.

In total, the Bangalore-based firm manages assets of 1.12 billion Indian rupees across its four previous funds, and it has invested in 78 companies.

Established in 1989, the firm is India’s first national bank-sponsored private equity fund. Some of the investors in its previous funds include national banks such as Allahabad Bank, Corporation Bank, Indian Overseas Bank, Oriental Bank of Commerce, Andhra Bank, Vijaya Bank and Small Industries Development Bank of India.