Report: Indian firm to raise INR7.5bn for defence fund

Led by Rajesh Narayan, the former India head of specialist finance at ANZ Investment Bank, the India Rizing Fund will focus on defence-related SMEs in India.

India Rizing Fund has reportedly launched an INR 7.5 billion (€119 million; $154 million) fundraising effort to invest in the defence sector.

The fund, which has been approved Securities and Exchange Board of India, seeks to raise INR 5.5 billion from overseas investors and the remainder domestically, according to the Business Standard.

The fund is India’s first to solely focus on investing in the defence sector. It will provide capital to small and medium enterprises engaged in the manufacture of defence equipment to bolster their manufacturing infrastructure and delivery capability.

The government is taking initiatives to privatise manufacturing in the defence sector, Rajesh Narayan, the managing trustee of the fund, told the paper.

Narayan, formerly a director and India head of specialist finance at ANZ Investment Bank, added that such privatisation would lead to increasing business opportunities for private companies as defence-related private sector undertakings would outsource production to them.

Furthermore, Indian regulations require foreign defence manufacturers supplying arms in the country to source defence parts worth between 30 percent and 50 percent of the total contract value from India. The firm is in talks with global arms suppliers who are interested in working with Indian companies so that they can fulfill these offset regulations.

The fund will deploy 90 percent of its capital in defence manufacturing, while the remainder will be committed to research and development in the fields of data fusion, thermal imaging and sensors, the paper noted.

India Rizing Fund could not be reached for comment.