Canara Bank will be getting into venture capital business

Soon Canara Bank India’s second largest public sector bank will be getting into venture capital business. The bank has taken the required approval fro a venture capital fund from the Securities and Exchange Board of India (Sebi). The fund won’t be sector specific.

Earlier in 1989 bank had floated a venture capital subsidiary, now this fund will be the largest on (Rs 500 crore) from the bank. Till now the VC arm has floated four funds, the total amount of which is Rs 112 crore and has been invested in around 80 companies.

Senior officials of the bank have confirmed that they have taken necessary approvals from the regulatory body, after which they have plans of hard-selling this product to other government-owned institutions for participation.

Canara bank sources said Allahabad Bank, Corporation Bank, Indian Overseas Bank, Oriental Bank of Commerce, Vijaya Bank, Andhra Bank and Small Industries Development Bank of India had earlier participated as investors in its earlier fund, the amount of which was around Rs 60 crore.

This new proposal from Canara Bank is the outcome of a series of measures started in the last six months. This financial institution first divested 49 per cent in its asset management business to Rebecco, and then moved to a massive rebranding exercise in an effort to connect to young investors.

During the past three quarters the bank during has also been aggressive in lending to the GMR Group. As per Venture Intelligence report, a venture and private equity research firm, India-focused PE /VC funds have been able to raise $4 billion during the first half of 2008 and it is expected that this number is likely to cross the $10 billion-mark.