GVFL bags SEBI approval for Rs 600 crore MSME Fund

Continuing to build on its fund portfolio, Ahmedabad-based venture capital firm GVFL, a pioneer of Venture Capital, has launched its new MSME Fund titled 'Value Multiplier Fund'. At a size of Rs 600 crore, the fund, which aims to invest in MSMEs / startup companies across sectors in India, bagged SEBI approval recently.

The fund will be invested in young companies with scalable business model, large target market, high entry barrier / first mover advantage, and supported by sound management team. Mihir Joshi, President & CEO, informed that its Value Multiplier Fund has received approval from SEBI as Category I (SME Fund) under AIF Regulations.

"There are new business models coming up in areas like medical devices, affordable healthcare, education and delivery, among others. Through the fund, we will look to invest in technology based and non-technology based consumption led business models. While we will look at very early stage firms if they are technology-based, in the other than technology category, we will look at early to growth stage firms with proven revenue model," said Mihir Joshi, President & CEO of GVFL.

Spanning roughly seven years from the final closure, the fund is likely to begin operating in next 4-5 months post first closure. In recently concluded Vibrant Gujarat Summit 2015, the Fund was showcased to various international Investors from Singapore, US, Canada, Japan & UK and has received good response. Investment appetite of domestic investors is also growing.

Offering a rationale on the fund focusing MSME and start-ups, Joshi said, "If country's GDP grows at 8- 9 per cent, then MSMEs are likely to grow at 18 to 20 per cent while technology led business will grow multifold. If we make investment in right businesses & entrepreneurs, the return on equity investment in such companies would be significantly higher."

Talking further about the fund, Joshi said that post budget, the fund size could be reviewed and raised if needed. "There are some global investors awaiting union budget after which the fund size could be increased. As of now, we are in talks with one anchor investor, few domestic financial institutions and few international investors," Joshi added.

At an average ticket size of Rs 15-20 crore, the fund is anticipating an IRR of 25 per cent.