New Delhi, Oct 31 (UNI) IFCI Venture Capital Funds Limited (IVCF) today announced that it has entered into a Memorandum of Understanding with Berlin-based Und Unternehmensfuhrung for promoting India Automotive Component Manufacturers Private Equity Fund which will fund Indo-German joint ventures in the sector.
IFCI Venture Capital Funds Limited (IVCF), a subsidiary of IFCI, and the German Company will promote investments in Indian auto component sector which will provide equity capital and value creation support.
The MOU was signed yesterday by Mr Andreas Waldraff, Managing Director, UBF.B and Mr A K Choudhary, Managing Director, IVCF, at New Delhi.
The Automotive Component industry is the fastest growing manufacturing sector of Indian economy. The fund will be the first of its kind and will facilitate joint Indo-German investments for empowering the Indian companies in Automotive Component industry for catering to the world markets.
''The fund will augment the equity capital needs of the SMEs having scalable business models, convincing strategy and prospects for high return on investments,'' Mr Choudhary said.
Under the MOU, IVCF and UBF.B will enter into joint venture to jointly raise and manage the fund.
The corpus of the fund is targeted at 100 million EURO.
IFCI, the parent institution of IVCF has already given 'in-principle' commitment to contribute an amount equivalent to 30 million Euro towards 30 per cent of corpus of the fund.
UBF.B will arrange an amount equivalent to 40 million Euro towards corpus of the fund.
The first closing of the fund is anticipated for March 31, 2008, with a subscription of 40 million Euro.
To enable Indian investors invest in the fund and overseas investors get benefit of double taxation, the fund would be constituted as 2-tier structure with Indian investors contributing in India Domiciled Trust Fund and International Investors investing in Overseas Domiciled Limited Liability Company (LLC).
IVCF, set up in 1975, is a pioneer in providing start up business capital to entrepreneurs in India. The IFCI Ltd., TATA Group of Companies, SUUTI (erstwhile UTI) and IL&FS Infrastructure Equity Fund hold equity in IVCF.
UBF.B, a German consultancy firm, was founded in 1998 with a pronounced interest in Indo German business.