With an aim to invest in startups and MSMEs in the early growth stage, Ahmedabad-based GVFL Limited has launched INR 600 Cr. MSME Fund, known as Value Multiplier Fund.
The Value Multiplier Fund has already received approval from SEBI as Category I (SME Fund) under AIF Regulations.
Speaking on the newly launched fund, Mihir Joshi, President & CEO, GVFL said, “The fund will focus on the technology startups and non-technology MSMEs in the early-growth stage. So far we have received interest from several international and domestic investors to invest in the fund.”
The fund will invest in young companies with scalable business model, large target market, high entry barrier or first mover advantage, and supported by sound management team.
At an average ticket size of INR 15-20 Cr, the fund is anticipating an internal rate of return of around 25% and an investment horizon of 7-9 years, the fund is likely to start operating over the next 4-5 months.
The company also said that the size of the fund may be increased if required after Union Budget 2015-16. Besides, International investors from Singapore, US, Canada, Japan, UK and local domestic financial institutions including banks have shown interest to invest in the fund.
As per the company, investment appetite of domestic investors is also growing. There has been tremendous optimism in investment activities in India.
If country’s GDP grows at 8-9%, than MSMEs are likely to grow at 18-20% while technology led business will grow multi-fold.
The company feels that due to smaller scale and limited access to funding, MSMEs and startups have been facing several common problems related to finance as they do not have collateral, track record, and creditworthiness.
The fund will also explore funding opportunities in the medical devices, affordable healthcare, education platform and delivery among others.