India’s UTI Raising New Fund

UTI Ventures, an eight-year-old Bangalore-based firm, is in the process of trying to raise its third venture fund, according to the Business Standard, which says UTI’s target is between $400 million and $450 million, roughly four times its last fund, which closed in 2005.

UTI’s investments are all over the place, from Vallabhdas Kanji, which sells food spices and has raised $13.5 million since 2006, to South Indian Bank, which raised an undisclosed amount in September 2007 and has since gone public.

Says the Business Standard:

“The fund will open by July and close in 3-6 months. The company would tap institutional investors in the US, Europe and Asia. Endowment funds, pension funds and high-end sovereign wealth funds would contribute in the fund-raising exercise, according to sources.

The fund will finance deals ranging between $15 and $20 million. It would invest across sectors, with a major focus on infrastructure, retail and media. The venture capital arm of India’s third largest AMC has initiated talks with prospective companies for investment purposes.

In one of the biggest exits by a venture capital firm in India, UTI Ventures made 50 times its investment by selling 35.5 per cent stake in Excelsoft Technologies for Rs 125 crore to DE Shaw, a hedge fund. UTI Ventures had invested Rs 2.5 crore in 2001 in the Mysore-based company.”

So far this year, 21 Indian companies have raised a whopping $4.2 billion through IPOs, an increase of 62 percent over the same period last year, when 50 companies raised $2.6 billion, according to Dealogic. Reliance Power, which is developing power projects all over the country and went public earlier this year, accounts for most of the money raised thus far: its $3 billion IPO set a record.