Key Highlights
The experience of fund managers (or general partners) is the driving factor behind capital allocation for the funds of funds of Small Industries Development Bank of India’s (SIDBI) and National Investment and Infrastructure Fund (NIIF).
“SIDBI seeded the fund managers in the country, we take pride in that. Approximately 43 per cent of our fund of funds has supported first time fund managers where we have given the first check. It is the fund manager who matters for us. If a fund manager is having those critical skills, even if he pivots through the life of the cycle, he will bring success to us,” Satya Prakash Singh, Chief General Manager, of SIDBI’s venture finance and investment vertical, said at the IVCA Conclave 2023.
SIDBI manages several Fund of Funds on behalf of various central government departments and statement governments including the Rs 10,000 crore Fund of Funds for Startup (FFS), a programme of DPIIT; Rs 310 crore ASPIRE Fund, which is part of the Ministry of MSME; and Rs 1,000 crore UP Startup Fund on behalf of Government of Uttar Pradesh. It has sanctioned Rs 7,225.45 crore and disbursed Rs 2,492.24 crore as of March 31, 2022.
Singh said the institution aligns its strategies and selection of fund managers based on the government’s vision and priorities, of which impact is a key criterion. “Over Rs 1,000 crore has been invested into tier 2-3 cities. Return is also one of them (criteria),” he added.
SIDBI is the principal financial institution engaged in the promotion, financing and development of MSMEs in India. SIDBI Venture Capital Limited (SVCL) is an investment management company and a wholly owned subsidiary of SIDBI.
National Investment and Infrastructure Fund (NIIF), an investment platform for international and Indian investors anchored by the Government of India, backs established and emerging fund managers in equal measure.
“We look for experience in the team. That experience many have been gained by doing 2-3 funds under the franchise or by working elsewhere and or by experienced professionals coming together. Roughly we split our portfolio half and half. From a quantum point of view, half of it is about established manager and the other half is about emerging managers,” Anand Unnikrishnan, Managing Partner - Fund of Funds, NIIF, said.
NIIF’s FoF Fund I, anchored by the GoI, has received commitments from multilateral institutions like Asian Infrastructure Investment Bank (AIIB), Asian Development Bank (ADB) and New Development Bank (NDB), making it the largest India-dedicated Fund of Fund globally. It focuses on building a portfolio of private equity funds across diversified sectors and investment strategies.
Unnikrishnan said the fund also has ability to anchor new strategies as well. “For a good team where we have conviction in the strategy, we can take the early risk,” he added.
NIIF manages over $4.3 billion assets under management through Master Fund, Fund of Funds and Strategic Opportunities Fund.
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