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Our Bureau

Ahmedabad , May 19

GVFL Ltd (formerly Gujarat Venture Finance Ltd), a venture capital fund for small entities, has announced that it has exited seven companies in 2004-05, which included the Bangalore-based software services company Deccanet Designs Ltd, which was acquired by Flextronics last year.

"We recovered more than five times the original investment made in Deccanet at the seed stage. Confidentiality agreements, however, prohibit us from disclosing the real figures," the GVFL Chief Executive Officer, Mr Vishnu Varshney, told Business Line.

The other companies in which GVFL divested its stake are Permionics Ltd, HK Finechem Ltd, IBABC Ltd, Microcon IVS Pvt. Ltd, Dinesh Polyber Ltd and Radiant Software Ltd.

"Ideally we would like to exit from our companies within a span of 3-5 years. But the gestation period is often longer because our investments are in start-ups and early stage companies. Whenever we see an opportunity of making good returns, which could be by way of strategic sale, we look forward to divestments," Mr Varshney said.

With the last round of disinvestment, GVFL now has exited 38 of its 56 investments made by its first four funds.

The venture fund's divestment ratio of 68 per cent is much higher than industry standards, he said. In the coming months, GVFL is planning to raise funds for the Rs 50 crore Gujarat Biotechnology fund announced last year and increase the corpus of the Gujarat IT fund from Rs 26.62 crore now to Rs 35 crore.

"We have already started getting enquiries from several companies which include one Hyderabad-based software giant and a couple of Bangalore-based companies. With Gujarat emerging as a favourable investment destination for IT companies, we expect several companies to set up shop in the State. We have approached the State Government for additional funding. We may even tap Small Industries Development Bank of India (SIDBI) for more funds if required," Mr Varshney said.

GVFL has also got some queries for the Biotech fund. The Centre has committed Rs 5 crore for the Gujarat Biotech Fund and GVFL hopes to tie up another Rs 45 crore in the next three months, he added.

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