Mumbai: The government’s $1 billion (Rs 5,000 crore) India Inclusive Innovation Fund (IIIF) will offer returns of 10-12% to investors, said Sam Pitroda, adviser to the Prime Minister on public information, infrastructure and innovation.
Sam Pitroda
That’s much smaller than the 18-25% in returns investors in venture capital (VC) and private equity (PE) funds typically expect while putting in capital.
The government has assured an investment of Rs 100 crore and expects to raise Rs 400 crore more in two-three months, after which it will begin investing.
Investors in VC and PE funds, known as limited partners (LPs), are already hard to convince because of the sluggish economic environment, both locally and worldwide.
“Don’t expect to make a killing,” Pitroda said on the sidelines of a conference on Monday. “Returns from IIIF will be modest in the range of 10-12%...as this fund has a social cause attached to it.” IIIF will be managed by private entities, he said, without disclosing names.
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The government’s contribution to the fund will be a little less than 20%. “We are in talks with state-run and private banks, various international investors like some agencies from UK and multilateral agencies like International Finance Corp., etc., to raise first tranche of Rs 500 crore under IIIF,” Pitroda said. The government announced the creation of the $1 billion IIIF in November.
makarand.g@livemint.com