Dhanalakshmi Bank plans venture fund with Rs 2,000-cr corpus

MUMBAI: Private sector Dhanalakshmi Bank plans to float a venture fund with a corpus of Rs 2,000 crore and will set up a wholly-owned subsidiary for the purpose, a top bank official said.

"We have obtained our Board approval for this business and will be approaching the Reserve Bank for its approval in about a week's time. The venture fund's corpus will be Rs 2,000 crore," Dhanalakshmi Bank Managing Director and CEO Amitabh Chaturvedi told media here.

The bank will set up a subsidiary called Dhanalakshmi Bank Venture, he said.

It plans to have a small investor base for the fund, "about 10-12 in all", Chaturvedi said adding "these investors could comprise institutions as well as high networth individuals (HNIs)."

The reason for floating this venture fund is that it would enable the bank to take a long-term view on investments, primarily in unlisted companies and start-ups, through this fund.

"As a bank, it will be risky to invest in start-ups and have a long-term exposure to them. With a venture fund, we can take a five-year view. Hence, our decision to set up this fund," he said.

The fund will take equity stakes in the ventures it supports. "We will mostly take significant minority stakes in the ventures. We will function as a strong supporting partner to the firms we invest in" Chaturvedi said.

On procuring the required funds he said, "There are already signs of revival in the market and long-term investors are beginning to return. Within the next 6-9 months, more will come, there will be no problem in getting investors," Chaturvedi said.