Financial Daily from THE HINDU group of publications
Friday, Aug 26, 2005
Financial Daily from THE HINDU group of publications Friday, Aug 26, 2005 |
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Info-Tech
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Venture Capital Secova gets $1.5 m debt-equity funding from Citigroup unit Our Bureau
Mumbai , Aug 25 CITIGROUP'S venture lending solutions business has funded a young outsourcing company, Secova eServices Inc, to the tune of $1.5 million (Rs 6.5 crore) in a mixture of debt and equity. This is the first such funding made by the venture lending solutions business since it was set up some months ago, and the first such funding extended by Citigroup anywhere in the world, said Mr Ajay Hattangadi, Vice-President, Venture Lending Solutions, Citigroup. Secova, which has 100 employees currently, operates out of Chennai and New Jersey and specialises in Human Resource Outsourcing. Secova will be using the funds for both organic and inorganic growth, said Mr Venkat Tadanki, CEO and a founder member of Secova. Secova brought into its fold New Jersey-based Empact in a sub-$5 million acquisition recently. "For our inorganic growth, we will be looking at acquisitions overseas," said Mr Tadanki. Citigroup's venture lending solutions operations are not part of a venture fund but an extension of its lending department, explained Mr Hattangadi. The operations target companies which at the early, high-growth stage of operations, he said. "This is not to replace equity but to offer a debt-equity mix that will enable companies to access money for funding growth and at the same time allow them to conserve their equity dilution," he said. The rate of loan extended is variable. But there is a fair amount of flexibility of rate as well as structure, in the sense that it could be in the form of a term loan, line of credit or equipment finance. Secova feels it has found a high growth niche in the BPO space. "Human Resource Outsourcing in particular needs a presence in the US with domain knowledge which we have," said Mr Tadanki. In addition to that Secova has targeted mid-range customers who want serviced employee bases ranging from 1000 to 20,000. The large established players who have moved their operations to India do not service the mid-range companies but confine themselves to large employee-base companies, said Mr TadankiAccording to him, the HRO opportunity in the US is around $40 billion.
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