Oyzterbay.com, a clicks and jewellery venture is to set-up 15 stores in 10 cities across the country. The Company managed to raise Rs. 8 crores in first round of its Venture Capital Funding, the funds have been provided by ICF Ventures.

HCL Technologies has invested in five venture capital funds which specialise in Technology areas. The funds include Viventure 2 , a venture Capital fund promoted by Vivendi group, Carlyle Internet partners Europe diamond head ventures fund and arena.

The Government has issued guideliness whereby it requires the registered Venture Capital Funds to exit from Companies within a period of One year after the Companies IPO. The ministry has also laid down that the VCFs must invest 75% of their investible funds in unlisted Companies and exit from them within a period of 12 months after the Company has gone public.

IDBI may spin-off its Venture Capital division into a seperate concern and also has plans to enter into film financing.

· International Venture Capital firm seeks written business plans or proposals from Hi Tech Enterprises. · Candidate companies must be willing to list their shares for public trading in Europe / USA. · Public Finance expertise provided. · Principals successfully completing submission stage expected to travel to London, UK for preliminary interviews. · Full due diligence required. No application or fees of any type are required. · Submissions latest by February 21, 2001 to:

THE GOVERNING board of Sebi is meeting on December 27 to take up the issues of exit norms for venture funds and amendment of public issue norms for non-technology companies to offer only 10 per cent equity if the size of the float is Rs 250 crore. Sebi has decided to do away with the mandatory exit norm for divesting shares of listed companies within one year for tax benefits. "We are going to delete the current one-year exit norm for VCFs. The funds can hold the shares of listed companies for more than one year," Sebi chairman D R Mehta said during the FICCI seminar on VCFs. This was required in order to attract more funds in the VCF sector and allow them to run profitably, he said. Sebi is considering changes in listing norms to allow non-technology companies to offload only 10 per cent if the size of the issue is a minimum Rs 250 crore, as against the present mandatory norm of 25 per cent divestment. Only technology companies are allowed to divest 10 per cent stake. The move is expected to benefit companies, having a prospective high m-cap, to raise funds from the capital market by divesting a smaller 10 per cent stake rather than offload 25 per cent and witness decline in share values. The rule for compulsory offloading of 25 per cent would be for small companies, Mehta said. So far, about 31 VCFs have registered bringing in Rs 180 crore and another 0.5 billion dollars was expected to flow into india by the end of this fiscal. "VCF inflow is expected to go up substantially," Mehta said referring to 10 more VCFs that are in the process of getting clearances by this fiscal. The Sebi chief, however, ruled out any relaxation of norms allowing VCFs to get listed before three years. "We do not want the public to lose money on VCFs which takes three years to stabilise," he said. Apart from implementing the remaining recommendations of the K B Chandrashekhar committee by December 2000, Sebi would also form an advisory committee to assist the regulator in monitoring the growing sector, Mehta said. Mehta said Sebi was eager to take up with the government the issue of allowing pension and provident funds to flow into the venture capital industry despite strong resistance from some corners. "We can take up with banks and insurance companies to invest a portion of their funds in the sector," he said. Citing the $11.9 billion FII investment so far in the country, he said foreign funds could also be attracted in the VCF industry. In fact, Sebi was considering roadshows in Silicon Valley, Boston and New York as part of showcasing the prospect of VCFs in India. "We are discussing this, may be Nasscom could be involved in the process," he said. Source: The Economic Times Dated : 12th December 2000

BIOTECH may be the buzzword among new economy businesses but most consultants and venture capitalists still view investments in these projects as “high risk” due to the higher rates of research/product failure. This creates a piquant situation for entrepreneurs and startups since venture capital or private equity is a preferred source of finance at the early stages. Investment in the biotech sector has not taken off in India with the same velocity as infotech industry. This can be attributed to factors like weak intellectual property regulations and the skills required to handle original R&D which are very different from reverse engineering, besides restrictive government policies and slow pace of regulatory changes. According to ICICI Venture’s chief of incubator fund S P Narayanan, the company is looking at funding contract research, bioinformatics and clinical trial projects as they provide steady stream of work and get paid during various stages. “Biotech is a capital starved economy. Since developing a new molecule costs around $500 million to 1 billion, we provide about Rs 2-3 crore with gestation of around 2 to 4 years”, Narayanan said. Once the venture activity picks up it would be followed by largescale funding from stock markets for commercialisation of technologies. According to Benjamin, the growth areas in the Indian biotech sector are expected to be in sectors of agri biotech and human biotech (therapeutics and diagnostics). “The area of contract research is also expected to show significant growth. Driven by this market opportunity, one could expect to see an increase in entrepreneurial and venture capital activity in these areas,” he added. Many global pharmaceutical players are looking to outsource greater portions of their research to lower their overall research costs. With advantages of availability of highly skilled manpower at relatively low cost, Indian contract research organisations are well positioned to take advantage of the growing outsourced research market, he said. ICICI has so far given seed capital and hand held many IT companies to raise funds in the next round of funding. It has a similar plan for biotech startups provided they develop the skill-sets in relevant areas within the broad spectrum. Analysts say it is likely that most venture capitalists will invest in the biotech industry, with the exception of few sector-focused venture capitalists (such as those in the IT sector). Other venture capitalists who are likely to show interest in the biotech space include IL&FS ventures, GTV, AIG, Indocean Chase, and ICF ventures, among others.

SECURITIES AND EXCHANGE BOARD OF INDIA
IES DEPARTMENT
VENTURE CAPITAL CELL
Mittal Court, B Wing, First Floor,
224, Nariman Point, Mumbai 400 021

IES/VCF/Cir-1/2001.
February 12, 2001.

To

All Venture Capital Funds.  

Sub: Reporting of Venture Capital Activity. 

All the Venture Capital Funds are requested to provide the information pertaining to their venture capital activity for every quarter starting from the quarter ending December 31, 2000 as per the format enclosed at Annexure-A. Information for the quarter ending December 31,2000 may be sent by February 28, 2001. Thereafter the information should be given within fifteen days of the end of each calendar quarter. The soft copy of the report should also be sent in Microsoft Excel Work Sheet.

This circular comes into force with immediate effect.  

Please acknowledge receipt.  

Yours sincerely, 

(L. K. SINGHVI)
SR. EXECUTIVE DIRECTOR.

Annexure A

Information regarding Venture Capital Activity for the quarter ended on

1. Name of the Fund :
2. Structure of the Fund : Trust/Company/Body Corporate
3. Date of Registration & Registration Number:
4. Trustee of the Fund / Scheme :
5. Manager to the Fund / Scheme (if any):
6. Corpus of the fund:
7. Nature of the Fund / Scheme: Open-ended / Close-ended
8. Tenure of the Fund / Scheme: _____ years (in case of close-ended funds / schemes).
9. Date when Minimum corpus of the fund / Scheme was raised to Rs. 5 crores (only in the cases of funds registered after September 15, 2000):
10.  Summary of Venture Capital Activity for the quarter ended -------

11.       Scheme/fund wise details of the Funds raised during the quarter as per the format given below :                                                                                                                              (Amount: Rs. Crores)

12. Scheme wise details of investments made for the quarter ended as per format given below (Amount in Crores)

13.               Sector-wise break-up of cumulative investments made for the quarter ended as per format given below                                                                                                                   (Amount in crores)

14.               Stage-wise break-up of cumulative investments made for the quarter ended as per format given below:                                                                                                                              (Amount in crores)

15. Cumulative disinvestments made for the quarter ended as per format given below

India Direct Fund (IDF), a private equity fund managed by International Equity Partners (IEP) has opted out of 3 Investments amongst the 10 Investments it has made in India so far. The three companies are Brain Gem, Alok Textiles and New World Application. IDF is said to have realised a cumulative return of $ 10 million on divestment against an original investment of $ 7.3 million. Next on the list is Secure Meters where the exit is being planned through the IPO route. The IPO will be managed by Enam Securities. The local advisors of IEP, Indian Direct Equity Advisors say that it has not been finalised whether IDF will make a full or partial exit. For the year ended 30th June 2002, Secure Meters reported a turnover of Rs 160 crores which is expected to reach Rs 200 crores in the current year. IDF expects to exit 50% of its current Investments. IDF has so far invested $28 million in 10 companies out of its corpus of $34 million. Presently the portfolio of Investment comprises companies such as Sun Earth Ceramics, Ecoboard Industries, Drish Shoes, United Studios, Time Packaging and Delta Innovative Enterprises. Though IDF prefers the IPO exit route it is now open to finding strategic buyers.