The government is planning to set up a first of its kind co-investment fund with the help of capital market regulator. Initially the fund will have a corpus of Rs 5,000 crore and will be anchored by two state-owned financial institutions, Life Insurance Corporation (LIC) and Small Industries Development Bank of India (Sidbi).
The fund will be
modeled following Germany and Austria like developed nations
investment vehicles to meet financial challenges to start-ups,
especially in technology like high growth sectors as reported by
Security and Exchange Board of India ( Sebi) is in the process of
finalising a frame work for the co-investment fund and the
announcement could be a part of the budget speech.
to a source, “Sebi has sent across the final budget proposal for a
co-investment fund that is going to augment the capital requirement
funds are typically made to meet additional capital needs and adds to
a main financial sponsor. Following recent measures such as separate
SME exchanges and the institutional trading platform (ITP), it is
proposed to set up a SME co-investment fund.
privy to the development said that the Sebi framework may allow the
co-investment fund to invest in an SME during its initial public
offer (IOP) or a company listing directly through the ITP route. ITP
is the mechanism of allowing an SME to list directly without an IPO.
a co-investment fund is mainly intended to tackle the financing
difficulties of start-ups with high growth potential at the seed and
early stages. The idea of such a fund was first mooted during the
previous Union Budget and Arun Jaitley, the finance minister, will
take a final call.