http://economictimes.indiatimes.com/news/news-by-industry/banking/finance/dalits-venture-into-funding-to-help-community-with-rs-500-crore-fund/articleshow/10964046.cms
3 Dec, 2011, 03.31AM IST, Biswarup Gooptu,ET Bureau
Dalits venture into funding to help community with Rs 500 crore fund
BANGALORE: India's Dalit businessmen are pooling together risk capital
to set up a venture capital fund for their brethren, the first
initiative of its kind in the country. The Rs 500-crore fund, being
championed by the Dalit Indian Chamber of Commerce and Industry, will
be registered with capital market regulator Sebi by the end of the
year.
It will open for business in the middle of 2012. The initial corpus
for the sector-agnostic fund will come from the community's business
elite, a group which includes Ashok Khade, chief executive of the Rs
500-crore Mumbai-based Das Offshore Engineering, and Rajesh Saraiya,
chief executive of the $400-million (Rs 2,000-crore) UK-based steel
trading firm Steel Mont, who will anchor the fund as Limited Partners,
or LPs.
"The current funding mechanisms are largely collateralbased, which
means they are out of bounds for a number of Dalit entrepreneurs,"
said the chamber's Chairman Milind Kamble, explaining the rationale
for setting up the fund. Dalits number about 200 million, or one-sixth
of India's population, but control only 1% of the country's wealth
because they own very few assets, according to D Shyam Babu, a Dalit
scholar and activist, who is researching the community's economic
progress.
/photo.cms?msid=10964055 The Dalit business community has
traditionally faced major hurdles in accessing capital despite the
creation of government institutions such as the National Scheduled
Caste Finance and Development Corp. "The amounts disbursed are too
small - barely Rs 5 lakh - and even that is doled out in instalments.
There is no denying the government programmes are designed to help,
but they fall short," Babu said.
The fund will be run as a regular risk capital entity but will need to
balance social good with commercial interest as the aim is to broaden
the availability of capital for Dalit businessmen. "But this fund is
not a charity; it will be run as a business," Kamble said.
Prasad Dahapute, MD at Varhad Capital, a boutique investment banking
firm involved in setting up the fund, said they are seeking at least
30 members to contribute Rs 5 crore each. A number of well-known Dalit
businessmen have been asked to contribute to the fund and many have
agreed, he added.
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